By Teeka Tiwari, editor, Palm Beach Confidential
I’ve got good news and bad news for Americans investing in cryptos…
The good news is, the IRS just gave crypto buyers much-needed tax guidance.
The bad news? The new rules are a nightmare of complexity.
However, there’s a tax solution that’ll make your life much easier. And I’ll tell you more about it in a moment. But first, let’s talk about the new guidance from the IRS…
On Wednesday, after more than five years, the IRS finally announced its updated crypto tax guidelines.
IRS Commissioner Chuck Rettig wrote:
The IRS is committed to helping taxpayers understand their tax obligations in this emerging area. The new guidance will help taxpayers and tax professionals better understand how longstanding tax principles apply in this rapidly changing environment. We want to help taxpayers understand the reporting requirements as well as take steps to ensure fair enforcement of the tax laws for those who don’t follow the rules.
And today, I’ll tell you why you need to take the tax implications of your crypto investments seriously…
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The IRS Is Coming For You
Aside from a 2014 edict declaring bitcoin “property,” the IRS has offered no direction on how to account for cryptos. So the new guidance is an improvement.
As expected, it addresses tax liabilities created by cryptocurrency forks… acceptable methods for valuing crypto received as income… and how to calculate taxable gains when selling cryptos.
(You can check out the new IRS crypto FAQ section right here. But be prepared; there are 43 of them.)
For most people, though, the instructions will read as legalese. Now, I spend much of my days reading boring technical documents—and even my eyes glazed over while reading the new IRS rules.
But please understand: You must stay up to date because the agency is getting serious about enforcing taxation on crypto gains.
From Wednesday’s press release:
The IRS is aware that some taxpayers with virtual currency transactions may have failed to report income and pay the resulting tax or did not report their transactions properly. The IRS is actively addressing potential non-compliance in this area through a variety of efforts, ranging from taxpayer education to audits to criminal investigations.
As an example, the IRS paid blockchain intelligence firm Chainalysis nearly $2 million to look for tax cheats. And last year, crypto exchange Coinbase said it would turn over 13,000 client account records to the agency.
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He calls it Project Mastermind, and it has the potential to help you see 1,288% in total gains over the next year (that’s how much it saw last year in “beta” mode).
I recently wrote, “The writing is on the wall. Very soon, the IRS will be able to peer into every single crypto transaction on any U.S.-based exchange.”
That’s why my team and I have searched for a program that collects and organizes all of your crypto trade data into a usable format. Your CPA can even use it to figure out your tax liability.
Now, we can’t provide tax, legal, or accounting advice. So keep in mind: This is general tax information. You should consult your own tax, legal, and accounting advisors regarding your specific financial situation.
But if staying compliant to the best of your ability is important to you—and it certainly is to me—we suggest you consider this solution…
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But if you consider yourself an American patriot, you should check this out..
A Tax Solution for Crypto Investors
ZenLedger is a tax software for crypto investors. It makes it easy to import crypto transactions, calculate gains and income, and autofill tax forms like the Report of Foreign Bank and Financial Accounts (FBAR).
Further, ZenLedger prepares a number of useful documents such as capital gains and income reports. It’ll keep adding more in the future, too.
It covers all the major crypto and fiat currencies. And it works with major crypto exchanges such as Binance, Bittrex, and Poloniex.
ZenLedger also has a tool that shows which coins are in the black and which are in the red, by exchange. This will allow you to sell losers and harvest tax-loss assets.
This is the only accounting program I’ve found that covers all major coins, all major exchanges, and most major wallets—and provides actual, live customer support.
It’s given me a credible and defendable position to take if the IRS asks how I accounted for my crypto taxes. (Keep in mind, neither PBRG nor its affiliates receive any compensation for recommending this service.)
To learn more about ZenLedger, click here. Come tax season, you’ll be thankful you used it, too.
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