Cryptocurrencies are the newest wave in financial services, and they’ve taken Main Street USA by storm. Cryptocurrencies – also known as virtual currencies or digital coins – are gaining more and more popularity as a new form of online payment. Digital coins can be used to purchase goods or services from vendors quickly and easily, often at a lower cost than regular third-party processing platforms like Visa, PayPal, or Venmo. However, more often than not, cryptocurrencies are bought and sold as investments. In fact, the virtual currency market has made several millionaires over the last few years.
Happy Tax isn’t just another tax planning and preparation service. Rather, we take an innovative new approach to meeting the changing needs of American taxpayers. We watched the cryptocurrency revolution unfold, and we responded by creating and launching CryptoTaxPrep.com and CryptoTaxAcademy.com, both of which are designed to help people manage their growing virtual currency tax liability. Happy Tax franchisees benefit from this new approach because it opens up an entirely new customer base that has been largely ignored by our competitors.
Cryptocurrency Investments Trigger Massive Tax Liability
The cryptocurrency market is a relatively new investment opportunity, and it has been famously volatile. While the ups and downs of the cryptocurrency market certainly make for some excitement, they can also trigger unnecessary tax liability. Bitcoin, the world’s first and still most popular virtual currency, ended 2009 at a high of only $0.39. Even after a substantial price correction in 2018, Bitcoin is still trading near $7,000. And those lucky enough to sell at the digital coin’s all-time high near $20,000 in December 2017 grossed huge profits. Many of these individuals either did not know to or intentionally avoided paying their taxes on these gains and now the IRS is out for blood.
The IRS cast a very wide net regarding cryptocurrency taxes. According to the agency, every sale, exchange, or purchase made with virtual currencies is a taxable event. This means every trade, purchase, or sale made in cryptocurrencies must be reported to the IRS. For high-volume traders, this may mean hundreds – if not thousands – of transactions they need to report on their tax returns this year. This can get complicated, quickly. This is particularly true for taxpayers who commonly bought and sold assets in coin-for-coin swaps. These types of investment moves are often a good way to diversify a cryptocurrency portfolio or speculate on new digital coins, but they make tax compliance a particularly challenging.
Financial experts remain bullish on cryptocurrency markets, largely due to the potential value of the blockchain technology underlying many digital coins. In fact, some pundits are claiming the cryptocurrency market will soon climb to a $1 trillion market capitalization. But regardless of whether cryptocurrency investments climb all the way to the $1 trillion valuation mark, cryptocurrency investors are a growing customer base for many tax professionals.
Cryptocurrency Tax Preparation and Planning
According to the IRS, Bitcoin and other virtual currencies are capital assets. This means that cryptocurrencies are subject to the capital gains rules, just like all other capital assets. At first blush, this tax treatment seems simple enough for a sophisticated digital coin trader to manage alone. However, in practice, nothing can be further from the truth.
Crypto tax liability is triggered whenever someone trades cryptocurrency for cash or other crypto coins, or whenever someone uses cryptocurrency to purchase goods or services. So, a regular cryptocurrency user can accumulate thousands of taxable transactions over the course of the tax year. Imagine having to calculate and pay capital gains tax every time you bought a cup of coffee or ate out in a restaurant – this is the scope of work that many cryptocurrency investors are looking at this tax season.
Experts estimate that American taxpayers owe about $25 billion in cryptocurrency taxes for coin trades in 2017 alone. Given the complexity of managing, reporting, and paying cryptocurrency taxes, the vast majority of digital coin users will be retaining the services of a tax professional this April. Most of the DIY tax preparation software can’t even handle the volume of information that the IRS requires for proper cryptocurrency tax reporting, so self-preparation is not an option for high-volume traders. As a result, many digital coin investors will be searching out professional tax assistance for the first time. But who will be there to help them? Happy Tax, of course!
Happy Tax franchisees join a team of partners that are innovative and strategic. We saw the cryptocurrency revolution unfold over the past few years, and we immediately recognized a need in this growing market. That’s why we launched CryptoTaxPrep.com in 2017 and CryptoTaxAcademy.com in 2018 – to respond to what we saw as a growing need in the financial community. As a Happy Tax franchisee, you would be in a prime position to ride this exciting new wave of financial technology while helping the cryptocurrency community get and stay compliant with the increasingly complicated suite of applicable tax laws. And due to our unique business model and operational design, Happy Tax franchisees need no special training to help clients with their cryptocurrency taxes. Simply find people who need help preparing their taxes, and our in-house team of Certified Public Accountants (“CPAs”) and tax professionals will do the rest.
Sales and marketing can be tough, especially when you feel as if you’re selling people something they don’t need. But tax season can be a real bear for many cryptocurrency traders and users. And compliance will only become more difficult as cryptocurrencies become more popular. Happy Tax already has a proven record of success helping cryptocurrency investors properly report and pay their taxes, and we’ve helped thousands of people save boat loads of money on their tax bills. If you’re looking for a way to join the cryptocurrency revolution without becoming an expert in blockchain technology, consider joining Happy Tax. If you’re anything like the lucky folks in-the-know who bought Bitcoin way back in 2009, you’ll be glad you did!