Top Ten Questions to Ask a Tax Expert About Your Cryptocurrency Investments

2018-04-10T06:31:42+00:00Cryptocurrency|

Cryptocurrencies have been getting more and more popular as they creep from the fringes of the internet to the mainstream. In the past, regulators have struggled to figure out how to deal with this new financial technology.  However, the Internal Revenue Service established an official cryptocurrency tax policy in 2014, and the agency has been refining its rules ever since.

If you’ve bought or sold cryptocurrencies, it’s a good idea to discuss your investments with an accountant or qualified tax expert. If your hometown accountant isn’t up to speed on the cutting-edge world of virtual currencies, Happy Tax offers tax advice and planning services specifically focused on cryptocurrency investments.

  1.    I heard Bitcoin, and other cryptocurrencies aren’t taxed. Is that true?

Bitcoin – the world’s first cryptocurrency – was invented in 2009. However, most of us didn’t even hear about it until recently. There are a lot of myths circulating about virtual currencies, and relying on rumors is never a good idea when it comes to your financial future.  To make sure your assets are protected, contact a qualified cryptocurrency accountant before filing your returns with the IRS.

  1.    If I plan on buying or selling cryptocurrencies, what records should I keep?

The IRS expects you to be able to prove any income and deductions you claim on your tax returns, so smart investors are prepared with good documentation. Your accountant can help you prepare any records you may need to submit to the IRS. However, unlike other types of investments, many of the required documentation is only available online. If your accountant isn’t sure about what records the IRS will require from you regarding your virtual currency investments, contact a skilled cryptocurrency tax expert like the specially-trained accountants at HappyTax.

  1.    I’ve dabbled in Bitcoin gambling. Do I need to report my winnings to the IRS?

Gambling wins and losses are usually reported to the IRS, but many online gamers aren’t sure how this impacts their tax liability. If you’ve won or lost any money on a Bitcoin gambling site, be sure to discuss how this affects your tax return. A qualified cryptocurrency accountant can help you understand how your online gaming impacts your tax liability.

  1.    Is there some way I can write off my losses from bad cryptocurrency investments?

They say every cloud has a silver lining, and the benefit of losing money on a bad investment is that you can generally write it off from your tax liability. If you’ve lost money on virtual currencies this year, a qualified accountant can help you use the loss to your benefit come tax time.

  1.    I hear a lot about virtual currencies falling under tax loopholes like the “like-kind” exchange exemption. Can I avoid paying taxes on my cryptocurrency investments?

Minimizing your tax liability through careful planning is always a good idea. Evading taxes, however, is not.  Failing to pay the required taxes on your cryptocurrency investments can land you in real hot water with the IRS, so make sure your accountant understands exactly how the IRS treats virtual currency.  For extra peace of mind, reach out to a cryptocurrency accountant at HappyTax. These specially-trained, licensed accountants can help you make sure you minimize your tax exposure in a legally compliant manner.

  1.    Do the 2018 federal tax reforms impact cryptocurrency investments?

The federal government passed a massive tax reform in the closing days of 2017, and many accountants are still figuring out exactly how their clients are affected. If your accountant has some doubt about how the new laws affect your cryptocurrency investments, consult with a cryptocurrency tax expert at HappyTax.

  1.    Will the IRS really come after me if I don’t report my earnings from Bitcoin or other cryptocurrencies?

Being audited is never fun, especially when the IRS assesses you with fines and penalties for failing to pay your taxes in a timely manner.  Play it safe, and plan your cryptocurrency investments with tax season in mind. A trained cryptocurrency accountant can help you stay on the right side of the law while still minimizing your tax liability.

  1.    If I make or take out a loan using cryptocurrency, does this impact my taxes?

More financial services are available using Bitcoin and other cryptocurrencies every day. If you have made or accepted a loan issued in virtual currency denominations, you need to know how this impacts your tax liability. Like many of the more nuanced tax issues surrounding cryptocurrencies, your tax exposure depends on the details and circumstances of the loan. If you’ve made or taken out a loan using cryptocurrency, consult a specially-trained cryptocurrency accountant like qualified professionals at HappyTax to make sure you’re disclosing everything the IRS requires.

  1.    Do I really need a professional to help me understand my tax liability on cryptocurrency investments?

Tax season can be relatively simple and stress-free for people who invest using traditional means. Virtual currency investors, however, often have more complex needs when it comes to tax planning and preparedness. Happy Tax employs the most skilled and experienced Certified Public Accountants to prepare your tax returns. The experts at Happy Tax can help you make sure you plan your cryptocurrency investments in a manner that minimizes your tax exposure.

  1.   If I invest in cryptocurrencies, should my accountant have any special training?

When selecting a tax professional, it’s best to make sure to find someone who understands your financial needs. Every Happy Tax customer works with a licensed Certified Public Accountant who has been specially trained in the taxes that apply to Bitcoin and other virtual currencies. As a result, you can count on Happy Tax to provide cryptocurrency tax planning and preparation services that give you the peace of mind you need come tax season.

           Professional relationships are important, and many of us plan our taxes every year with the same accountant we’ve known and trusted over time.  However, in the complex world of cryptocurrency investments, it’s critical to make sure your accountant is up-to-date on the latest rules and regulations. The qualified cryptocurrency accountants at HappyTax have been specially trained on the requirements the IRS has imposed on cryptocurrency investors. After discussing your tax plans with your regular accountant, reach out to the friendly professionals at HappyTax to make sure you avoid common pitfalls in the constantly-changing world of virtual currency tax rules.

CRYPTO
IS IN OUR DNA.

GET STARTED

About the Author:

Speaker. Author. Visionary. Mario Costanz amongst many other things excels in these categories. As a longtime avid blockchain and cryptocurrency enthusiast, Mario saw a need for quality tax preparation in the crypto trading community and launched CryptoTaxPrep.com as a division of Happy Tax. CryptoTaxPrep.com has positioned itself as the industry leader in cryptocurrency tax preparation. Mario was recognized by Forbes as one of the “Gutsiest Entrepreneurs” in the world and holds many rankings and accolades with Entrepreneur Magazine, Accounting Today, and many Blockchain/Crypto industry leaders. Email Mario at mario@happytax.com for more info or marketing@happytax.com to book for a media appearance.