December 7, 2018

Happy Tax Provides Necessary Services For Crypto Investors

The end of the year is quickly approaching! And while for many of us this means lots of excitement for the holidays, cryptocurrency investors across the country are getting nervous about their potential tax liability. After all, 2018 was a tough year for digital coin traders, and the last thing they want to see is a big bill from the IRS for trades that didn’t do them much good in this year’s down market.

Like many tax laws, taxation policies surrounding cryptocurrencies are pretty ambiguous and complex. Happy Tax, one of the fastest-growing and most successful franchise opportunities in the tax services industry, knows that this means a lot of cryptocurrency investors will be struggling to prepare their taxes this year. Fortunately for them, we’ve got a solution.

Happy Tax Gets Taxpayers What They Need

In the current digital coin market, there are over 1,500 known cryptocurrencies being actively traded. Depending on the avenues you’ve taken to spend, dispose, or receive your cryptocurrency, you may find yourself facing different categories of taxation. This may be confusing, as many individuals may have thought that because it is a currency it would be taxed like any other currency. This isn’t exactly wrong, but at the same time, it also isn’t exactly correct.

In 2014, the IRS issued cryptocurrency tax guidance to the American public in hopes that it would make it very clear to taxpayers that virtual currencies will be treated as capital assets. However, cryptocurrency may only be treated as such providing that the currency is convertible to cash. Under these circumstances, the guidelines explained that virtual currency will be taxed under the rules of capital gains. These rules would apply to any and all gains or losses through cryptocurrency transactions.

Sound simple? Well, unfortunately, it isn’t - not at all. American taxpayers need cryptocurrency tax help, and Happy Tax is responding to this call to action with everything it’s got.

Crypto Tax Help is Here!

Happy Tax is among the leading tax preparation and planning franchises because it cares about its customers. Our in-house team of licensed Certified Public Accountants understand the rules and regulations that affect the millions of Americans who bought or sold cryptocurrencies this year, and they’re available at your convenience. But if you’re still not convinced you should leave your crypto tax planning and preparation to the experts, we’ll start digging into the nitty-gritty of how complicated figuring out your cryptocurrency tax liability really gets.

The first thing taxpayers should take into consideration when calculating their cryptocurrency tax liability on their own is the cost basis of their digital currency holdings. Cost basis is a critical first step because, in order to calculate capital gains and losses, you must first determine the original cost or value of the taxable assets. That way, you can find out how much it has gone up or down in value from the time you acquired a taxable asset. However, your cost basis isn’t necessarily just the price of the currency at the time you bought it. To calculate your cost basis, you will have to figure out the original purchase price of the asset or currency, plus any related costs. This can get tricky as certain aspects of crypto purchases, such as fees, can be treated differently for tax purposes. This information can be difficult to collect and organize, and a tax professional will most certainly make this process simpler for you.  

U.S. tax laws are rigid. If cryptocurrency taxes are not properly filed with the IRS, regardless of whether the taxpayer is aware of the specific requirements or not, then failure to pay penalties are imposed. Inaccurately calculating the cost basis for any investment is easy to do, and it also comes with the potential for having to pay a hefty fine and sit for hours at an auditor’s desk. By establishing the proper cost basis, you can avoid the potential headaches that come from crunching the numbers wrong. By ensuring you’re paying the correct amount in taxes, taxpayers can avoid the ordeal altogether. And of course, the only way to ensure the accuracy of your cost basis is to leave it in the hands of a licensed tax professional.

Crypto Taxes are Complicated – and It Doesn’t End There

Digital currency users are taxed on their gains and losses in much the same way as taxpayers who buy and sell stocks. But trading cryptocurrency is not the only taxable activity you can do with digital coins.

A growing number of consumers treat cryptocurrency like cash for internet spending. These consumers generally spend digital currency on goods or services online rather than to purchase other cryptocurrencies as an investment. In this case, the taxpayer must account for all individual digital currency transactions when they file their tax return in April. This sounds like a huge burden – and it is. The IRS cast a wide net in establishing cryptocurrency tax policies, so each and every transaction made using cryptocurrency is taxable.

Cryptocurrency investors are required to declare taxes by using the tax form 1099-K, which calculates all of the gains an individual made in cryptocurrency-to-cryptocurrency transactions throughout the calendar year, regardless of whether those funds have been withdrawn or not. Major cryptocurrency exchanges typically have a tax filing system in place to help taxpayers collect important information for the IRS, but for many cryptocurrency users, this means having to deal with a lot of data. And even for the few of those in the cryptocurrency community that has found these tools helpful for DIY cryptocurrency tax returns, with new tax laws being implemented all of this may change again soon.

Happy Tax is Leading the Way in Customer-Oriented Tax Services

Cryptocurrency is on its way to becoming a mainstream commodity. This is exciting, but also nerve-wracking. Many Americans are finding themselves in a bind this tax season, but they can make their lives much easier by getting help from the cryptocurrency tax experts at Happy Tax. Our franchise partners are constantly fielding new requests from cryptocurrency investors, many of whom are still confused about how they should treat the currency for federal tax income purposes. But with the quality of service they get from Happy Tax, their frustration quickly turns to glee. Before you know it, they’re telling everyone they know to smile, because it’s time to file!

Happy Tax

The #1 tax filing solution that combines expert CPA tax preparation with a fast, easy, convenient, and secure mobile experience!
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