Cryptocurrency and Taxes: Our Experience
Global Tax understands Bitcoin and other cryptocurrencies. We have been filing crypto tax returns since 2015 and were one of the first US accounting firms to specialize in cryptocurrency. Our experience runs the spectrum from exchanges in the US and Asia to token sales, decentralized exchanges, mining, peer to peer trading and beyond.
Clients include high net worth individuals, miners, traders, and blockchain startups.
As you’d expect, we accept Bitcoin and would consider other major cryptocurrencies.
Daniel Winters, founder of Global Tax, has presented on Cryptocurrency & Taxes at numerous conferences in New York, San Francisco, Austin, Dallas and Saint Louis. Daniel has also created a course for CPAs about Bitcoin & Taxes, written articles for Coindesk and blockchain industry sites, and been interviewed by Bloomberg as well as other media outlets.
Whether you’re trading cryptocurrencies full time, just sold the bitcoins you mined in 2011 or simply want to accurately report your cryptocurrency activity, we understand your situation. When required, we can also prepare any forms related to foreign income. We keep current with the latest industry and regulatory developments and, like you, we’re excited about crypto.
Cryptocurrency and Taxes: What You Need to Know
Bitcoin and other virtual currencies are treated as property by the IRS, similar to stocks or bonds. Under federal tax law, if you purchase Bitcoin and later sell Bitcoin, then you will have a gain or loss on the transaction. This was outlined by the IRS in a 2014 notice. http://www.irs.gov/pub/irs-drop/n-14-21.pdf However, mining Bitcoin results in immediate taxable income for the fair market value of the Bitcoin mined on a given day. In addition, Bitcoin received in exchange for goods or services is treated as ordinary income and wages paid in Bitcoin are treated the same as normal wages paid in fiat currency.
Since Bitcoin sales are treated like stock sales, the resulting gain will be either short term or long term and subject to the respective tax rates. Long term sales are those for which Bitcoin was held for more than one year and are subject to a 15% capital gains tax for most taxpayers. Taxpayers in the top income bracket are subject to a 20% capital gains tax, which applies to income above $434,550 for single taxpayers and $488,850 for married filing jointly. Short term sales are those for which Bitcoin was held for up to one year and are subject to ordinary income rates up to 37%.
Capital gain/loss is calculated by subtracting the purchase price, or basis, of the virtual currency from the sale price. The basis of a given amount of virtual currency is the fair market value, in US dollars, on the date of payment or receipt. To convert to US dollars, you should use an exchange rate which is consistently applied in a reasonable manner.
Cryptocurrency and Taxes: Lowering Your Tax Bill
Our rigorous analysis can help reduce your cryptocurrency tax bill. Just upload your cryptocurrency transaction records to our secure client portal, and Global Tax will determine the optimal tax treatment. We will analyze each transaction, including purchases, sales, mining income, gifts, charitable donations and non-taxable transfers between accounts. In addition, we can organize accounts from multiple wallets or exchanges.
We will then prepare the necessary tax forms, such as Schedule D, calculate any taxes due, and electronically file your tax return.
For an initial consultation, just give us a call at 201-456-5081 or complete the below contact form.
Any tax-related opinions in any part of this document or website (including any links) are not tax advice. The above is a general explanation of tax law and should not be relied upon for your individual circumstances. Tax advice cannot be provided on a general basis, and must be specifically tailored for each individual by his or her particular representative. Any user of this website should seek the advice of a competent, independent tax professional regarding that user’s particular circumstances.
In addition, any tax advice given herein (and in any attachments) is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (i) avoiding tax penalties or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed therein.