Successfully investing in crypto is tough. Juggling crypto and taxes is a total headache and not something anyone really wants to deal with. Understanding Crypto Taxes and Accounting and getting them right can be a daunting task so we wanted to point out and explain some things you might not know about crypto tax issues that are likely to come up as you file your taxes. Our software takes care of a lot of these headaches for you, fast and easy.
Why is Cryptocurrency Taxes an Issue
The IRS successfully sued Coinbase for customer information in 2018 and has reminded investors that you must pay taxes on cryptocurrency capital gains and mining income.Other US based exchanges are taking compliance seriously and that means individual crypto investors really need to think about taxes, accounting, and compliance too.Please consult a tax professional as there is still a lot of grey area when it comes to regulation around Crypto Taxes and Accounting.
Crypto Tax General advice
Our first bit of overarching advice is:Keep good records. Store your information in safe places with backups
- Consider cash vs tax liabilities
- Consider long term vs short term gains
- Consider paper gains/losses vs realized gains/losses
We’ll get into more depth on all of these.
Keep Good Records
The IRS puts the burden of accurate crypto tax payments on you, the individual. As such, an exchange shutting down is not a valid excuse in their eyes. So, we recommend that you make a repeating calendar appointment that reminds you to pull the transaction history from your exchanges. 2019 may be a very painful year with many token projects and exchanges going out of business. You’ll want to keep your own records. Make sure you are backing up your seed phrases, paper wallets, private address, and trading histories.