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Archives for March 2018

Cryptocurrencies as Property & Why People Haven’t Been Reporting

Here at Camuso CPA, we offer cryptocurrency tax services in Charlotte. Cryptocurrencies are an exciting new currency medium that is fast gaining popularity. However, as a new monetary medium, there is a lot of grey area come tax season. The last thing any good investor wants is to be scrutinized by the IRS, and that is fast becoming a real possibility as cryptocurrencies become more mainstream. Here, we will go over why many people haven’t yet reported their cryptocurrency transactions to the IRS, and why they should.

Why haven’t people been reporting their cryptocurrencies?

According to the personal financial service Credit Karma, only about 0.04 percent (or 100 citizens out of 250,000) of United States citizens reported their cryptocurrency transactions to the IRS as of February 13. The Tax General Manager of Credit Karma, Jagjit Chawla, did not express surprise at this low number, stating that people with more convoluted tax situations (like those performing cryptocurrency transactions) generally file later in the season. However, he added that the numbers did seem low considering how mainstream cryptocurrencies have become.

Cryptocurrencies as property

Back in March of 2014, the IRS began providing some guidance for the taxation of Bitcoin, one of the most popular and mainstream cryptocurrencies. Because of these guidelines, cryptocurrencies are treated as property rather than currency. Like all taxed property, when you report cryptocurrency to the IRS, what you owe will be based off of the price you bought it at, the price you sold it at, and the change in value between when you bought and sold it. Many experts believe this is not the ideal designation for cryptocurrencies, and may even become a deterrent in their adoption. Trader Brandon Williams, for instance, told CNBC that he thought it would be better to treat cryptocurrencies as currency.

In fact, Williams also argued that the small amount of cryptocurrency traders who have filed them in their taxes is due specifically because of the difficulties of treating cryptocurrencies as property rather than currency. For instance, he states that if a person makes more than two trades a day, they can expect to spend three to four hours every two weeks just tracking gains and losses while taking into account volumes and volatility.

With such a laundry list of tasks necessary just to file taxes properly, it’s no wonder most cryptocurrency traders haven’t filed yet. However, they must file if they don’t want to be audited by the IRS. Due to the novel and complicated nature of cryptocurrencies, the best and most efficient way to ensure you have your taxes done properly is to hire a professional CPA knowledgeable about cryptocurrencies.

If you are looking for qualified crytpocurrency tax services in Charlotte, Camuso CPA can help! Please feel free to give us a call for more information about our cryptocurrency and other tax services. One of our friendly and knowledgeable representatives will be happy to answer any questions that you may have. We look forward to hearing from you!

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1099-K From Coinbase: What To Do

Here at Camuso CPA, we offer cryptocurrency tax help in Charlotte. Cryptocurrencies are a new monetary medium that are taking the world by storm, and are becoming more widely accepted each and every day. Unfortunately, come tax season, that can leave earners in the dark with how to report income from this new currency medium. That is where we come in! We have the knowledge base and experience necessary to navigate the tricky tax regulations for cryptocurrencies. For more information, feel free to give us a call. In the meantime, we’ll go over your 1099-K from Coinbase, and what to do with it.

What is a 1099-K?

A 1099-K is a form used for tax purposes to report both credit card and other third party payments that you received during the last tax year. Any third party payments made for over 20,000 dollars, or that has made 200 or more transactions, must legally be reported on a 1099-K. If you have been using the cryptocurrency market Coinbase, they should send you a 1099-K once you meet those requirements.

Your 1099-K doesn’t include all pertinent tax information. For instance, the gross amount reported does not include adjustments, gains, or losses that may need to be reported to the IRS. Put another way, the 1099-K lists the dollar amount and date of each cryptocurrency transaction. Because it only lists these totals, it cannot be used to determine how much you will need to pay in capital gains taxes.

What is I didn’t get a 1099-K from Coinbase?

If you did not meet the requirements listed above, then Coinbase did not send a 1099-K. However, this does not mean that you do not have to report your capital games come tax season. Any and all cryptocurrency investments, as well as the spending of cryptocurrencies on goods and services, are subject to taxation.

Reporting Cryptocurrency

To report cryptocurrency, you need to figure out your cost basis, which is the amount you paid for the cryptocurrency when you purchased it. Like almost all capital assets, the tax rate depends both on the price you acquired and sold your cryptocurrency for, but also the time that elapsed between buying and selling, and the changes in the cryptocurrency value during that time. While some investors do try to do their own cryptocurrency taxes, the regulations are still being worked on, and are constantly changing. This can create problems with your taxes, and nobody wants to deal with problems when it comes to the IRS. Instead, you can hire out to a professional CPA who specializes in cryptocurrencies, like you’ll find here at Camuso CPA.

Want cryptocurrency tax help in Charlotte? We can help! Please feel free to give us a call at your earliest convenience for more information about how our tax services can benefit you. We offer many other CPA services for you to take advantage of as well. One of our friendly and knowledgeable representatives will be happy to answer any questions that you may have.

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