For years, many of us have used software and mobile apps to help us manage our finances. However, even the most experienced self-preparers should think twice before going at it alone. This is especially true for people who are just now figuring out how to report their cryptocurrency investments to the Internal Revenue Service (“IRS”).
Tax Self-Help Gets More Sophisticated, May Lead Taxpayers Down the Wrong Path
In our increasingly digital lives, most of us have gotten pretty comfortable with computer programs and mobile apps. Some of us track our wages, expenses, and other financial activity meticulously. So, why not self-prepare your tax returns?
The answer is that the most common mistakes on tax returns are simple errors. Transposing numbers in your dependent’s social security number or a typo in your middle name can end up raising a red flag on your tax returns, and even get you audited. Mobile apps and software programs are helpful tools, but they can never replace human wisdom and intuition. Happy Tax offers tax advice and planning services specifically focused on the needs of cryptocurrency investors. Every Happy Tax customer works with an experienced Certified Public Accountants (“CPA”). These licensed professionals stay current on all of the new tax laws and policies affecting virtual currency investments. In this rapidly evolving landscape, not consulting with a tax professional can cost you big.
Having everything at our fingertips has made keeping track of data much easier. However, having all of your records organized is only the first step towards ensuring your tax return is filed properly. Unlike your excel spreadsheet, accountants aren’t just crunching numbers. Rather, they work with you to strategize, giving you expert advice in the all-too-complex world of tax planning. Given that tax planning got a lot more complicated in 2018, not consulting with a tax professional this year can be a big mistake.
Federal Tax Reform Impacts Cryptocurrency Investors
Congress achieved an enormous feat when it managed to pass a major tax reform bill just before Christmas last year. But since the law was so last-minute, many taxpayers have been left scrambling to figure out how they need to manage their tax liability under the new laws. Starting in 2018, you will most likely need to change the way you prepare your return. And, if you’re disclosing cryptocurrency assets to the IRS, things can get complicated quickly.
As Bitcoin and other virtual currencies become more and more mainstream, the IRS has been cracking down. The recent tax reform bill was a nail in the coffin of any possible exemption cryptocurrency investors may have been able to see on their capital gains taxes. This exposes most cryptocurrency investors to tax liability, and many of us simply don’t know how to manage it.
Why Do I Need a Tax Professional to Help Me Manage My Cryptocurrency Taxes?
The new tax rules are complicated, and even some tax professionals don’t know what to make of them. This is particularly true when it comes to the cutting-edge world of cryptocurrency investing. Many in the cryptocurrency community remain unaware of the legal and financial liability they can face if they don’t manage their portfolios properly. This has led to major under-reporting of virtual currency assets to the IRS, and the agency is starting to come after cryptocurrency investors who have not properly disclosed their assets.
Virtual currency users are dealing with the same uncertainty regarding federal tax reform as all of the rest of us. But they’re also facing an increasingly hostile stance from the IRS. The IRS recently filed suit in federal court against Coinbase, the largest Bitcoin exchange in the U.S., seeking information on possible tax evaders. The IRS was granted user data on anyone who transacted more than $20,000 worth of virtual currencies between 2013 and 2015. Unfortunately for these individuals, they can expect an audit letter pretty much any day now.
The IRS is serious about collecting its dues on cryptocurrency investments. Anyone with a virtual currency wallet must be prepared to report their assets on their tax returns this year. And, if you’re among the thousands of Americans who failed to report cryptocurrency gains in the past, consult a Certified Public Accountant (“CPA”) immediately. The IRS is actively pursuing investors who made money on cryptocurrency exchanges as far back as 2013, so don’t think you’re off the hook for prior years’ non-disclosures.
What Can a Happy Tax Do for Me?
You need a tax professional this season. But how do you choose the right one for you? When selecting a tax professional, it’s important to consider qualifications. Every Happy Tax customer works with a licensed Certified Public Accountant, not just a bookkeeper or unlicensed tax preparer. CPAs go through extensive qualification, competency, and ethics standards for licensing, which altogether ensure that you get the quality of service you deserve. The CPAs at Happy Tax have worked hard to get their licensing, and they are committed to providing you with the highest-quality tax advice and preparation services.
In addition to their recognized professional achievement, all Happy Tax CPAs have been trained in the tax rules that specifically apply to Bitcoin and other virtual currencies. So, you can count on Happy Tax to get you the tax planning and preparation services you need to manage your cryptocurrency investments effectively. While you may be used to the low-cost do-it-yourself options, Happy Tax employs the most skilled experts to prepare your tax returns in a way that minimizes the tax exposure of your virtual currency wallet and saves you money in the long-run.
At the end of the day, your investments are all about the bottom line. Happy Tax can help you comply with the reporting and payment requirements the IRS is starting to enforce against cryptocurrency investors. Nobody likes paying their tax bill, but complying with IRS regulations regarding virtual currency exchanges is critical. Failing to properly report and pay taxes on cryptocurrency investments can put you at odds with the IRS and possibly cause you to end up in federal court. Happy Tax is here to make sure you avoid the tax pitfalls in the constantly-changing world of virtual currency investments