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Posts by Patrick Camuso, CPA

Top 5 Tax Tips for Cryptocurrency Investors, Traders and Miners

Here at Camuso CPA, we offer a wide array of tax services for investors including tax preparation and tax planning. Financial service companies are transitioning from employee driven revenue models to information driven revenue models. Camuso CPA strives to deliver useful insights and offer relevant explanations about the latest tax and financial topics.

Reporting Is The Taxpayers Responsibility

Most Cryptocurrency exchanges that you trade on will not provide 1099 reporting data. The exchanges that do provide this data like Coinbase or Gemini have historically only provided Form 1099-K which does not provide the relevant cost basis information required to accurately report your transactions for tax purpose and also does not reconcile multiple exchanges.

That means you need to work with an experienced cryptocurrency CPA firm like Camuso CPA to protect your assets and legally minimize your taxes. We will reconcile all of your exchange data and accurately report your cost basis and gain/loss to the IRS.

Documentation Is Key

Since cryptocurrency is taxed as property almost every cryptocurrency transaction is a taxable event which means documentation is key in order to provide your CPA with all the relevant information required to accurate analyze your cryptocurrency transactions.

Here’s what the typical crypto investor needs to provide to their CPA, this data can usually be downloaded from your transaction histories on exchanges. Create a complete list of all trades for that taxable year, including the following information. All these amounts must be calculated in USD based on the exchange rate at the time of the trade by your CPA:

  • Trade date
  • Type of Asset Purchased and Sold
  • How much it was paid for
  • How much it was sold for
  • The cost of doing the trade (fee)

Don’t Hide Trades

While paying taxes can at times be painful, it is very important that you include your crypto-trading activity with your tax return. A lot of traders are convinced that because of the anonymous, decentralized nature of Blockchain and crypto transactions, that there is no way for the government to see or know that they are making money trading/buying/selling cryptocurrency.

Unfortunately for these people, this is just not true. The Blockchain is a distributed public ledger, meaning anyone can view the ledger at anytime. Figuring out an individual’s activities on that ledger essentially comes down to associating a wallet address with a name. You can bet that the IRS is only gearing up to become proficient at doing that.

Ultimately, if you choose not to file your gains/losses, you will be committing blatant tax fraud to which the IRS can enforce a number of penalties, including criminal prosecution, five years in prison, along with a fine of up to $250,000.

Properly tracking and reporting your cost basis is imperative to protect your assets from penalties and interest as a result of underreporting. When analyzing cryptocurrency portfolios our starting point is the last ending tax year’s cost basis for each asset which is considered along with all relevant transactions from the current year to arrive at both an ending tax liability and ending cost basis for each respective asset you are holding.

This means that if you did not track your cost basis correctly in prior years or did not report it that your portfolio calculation for years following that will also be incorrect.

It is clear that, with the huge price declines in cryptocurrency markets during 2018, many people will be considering harvesting losses and reporting this for a tax benefit. If you did not report crypto activity up to now or tracked your cost basis improperly, those choosing to reveal losses this year will be at a high risk of audit and tax penalties. Taxpayers that have not previously reported will also need to report their crypto transactions every year going forward.

All Trades Are Taxable But There Is a Hidden Benefit

Since crypto to crypto trades are taxable investors need to be very aware when making trades during the year and work with a CPA on an ongoing basis to track their portfolio’s tax labiality for estimated tax purposes. We really saw this hurt investors during 2017 and hurt their portfolio when they were liquidating it to pay taxes on profits during the bull run in a bear market.

The good news is that since cryptocurrencies are generally classified as property, wash sale regulations should not currently be a concern for investors. This means investors can sell an investment to realize a tax loss, only to buy it back immediately thereafter at a bargain. Today, wash sales only apply to stocks and securities, so traders are operating in a gray area for now until further IRS clarification is issued. This is an area that we go over in detail with investors on an asset by asset basis to advise them on taking this position. We have saved investors millions of dollars in 2018 alone using tax planning strategies such as this.

CPAs Are Rushing Into The Industry

CPAs are late to the game but also rushing into the cryptocurrency space. As an industry leader in cryptotax services I have been able to observe how this niche sector is developing.

It is not out of the ordinary for me to get targeted with ads from various franchise organizations to “double my accounting fees” by offering crypto tax services with no prior experience. This catches me off guard.

I can only picture how investors are navigating this maze of service offerings and distinguishing from CPAs that have financial services experience and an understanding of crypto between CPAs that have just hopped on this bandwagon.

Analyzing financial transactions are a detailed process that can easily be plagued with costly errors that can impact multiple tax filing years if you do not have a structured process and workflow in place. Analyzing crypto transactions adds another layer of complexity due to the nascency of this industry and the reporting standards from exchanges.

Many CPAs are using a back offices from another company to actually analyze an investors’ portfolios and do not understand this process. Without the proper experience and training it is very easy for well-meaning accountants to make costly errors related to the portfolio calculations and advisory they provide investors.

Be careful and do you due diligence. At the end of the day your tax return is your responsibility and it is your job to work with an experienced CPA firm to protect your assets.

I would suggest that investors work with a CPA that not only understands and invests in crypto but also a CPA that has a strong background in financial services.

Here at Camuso CPA, we offer a wide array of tax and accounting services for cryptocurrency investors and traders including tax preparation, tax planning and portfolio reconciliations. Contact our team today to learn more about working with us and how we can protect your assets and legally minimize your taxes.

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CryptoTax Nightmare: 10,000 Bitcoin Trades Net Swedish 300% Tax

Here at Camuso CPA, we offer a wide array of tax services for investors including tax preparation and tax planning. Financial service and technology companies are transitioning from employee driven revenue models to information driven revenue models. Camuso CPA strives to deliver useful insights and offer relevant explanations about the latest tax and financial topics.

A cryptocurrency trader in Sweden has received a tax bill for almost $1 million. The case is one of a growing number of cryptocurrency-related cases being taken up by the Swedish Tax Agency, with several bitcoin traders receiving tax bills for millions of Swedish kronor since last year.

It is clear that tax enforcement related to unreported cryptocurrency tax liabilities from traders and investors is heating up globally with Sweden being no exception. In 2018 alone, the STA opened investigations into the activities of up to 400 Swedish crypto traders which is 10 times more than the previous year.

The cryptocurrency trader is currently disputing his tax bill claiming that for various reason it is unreasonable. This is due to the tax methodology and classification which the Swedish Tax Agency is applying to cryptocurrency transactions.

When the Swedish cryptocurrency trader included his cryptocurrency trades on the applicable tax form, he actually included a side note agreeing to corrections if his reports were wrong. This is not advisable and he would have been in a much better position contacting a professional experienced with cryptocurrency and the Swedish tax authorities to advise him before filing. He claims he got no response until 2018 when the tax agency audited him and decided to tax him at about 300 percent of the profit rather than 30 percent that he expected.

How US Investors Can Avoid This and Why They Need To Be Aware

Tax authorities across the world will continue to issue further guidance and focus more heavily on cryptocurrency tax compliance. We will continue to track these developments closely.  Time will tell, but it will be interesting to see how things develop here in the states related to the designation of cryptocurrency as intangible property from the Private Letter Ruling in 2014.

This created a lot of confusion across cryptocurrency traders and a lot of misinformation spread about the proper way to report and track cryptocurrency transaction for tax purposes.  Traders and investors who do not work with a CPA that is highly experienced in cryptocurrency taxation that is able to provide them accurate and proactive tax advice they may find themselves with an unexpected tax bill in the future, especially if they do not understand that every transaction is taxable.

Many investors cringe when thinking about taxes but working with an experienced cryptocurrency CPA can also lead to tax savings in addition to asset protection. We have saved our clients millions just this past year with proactive tax planning and advisement related to their cryptocurrency portfolios.

If you searching for CPA firms to assist you with reporting cryptocurrency income and capital gains, contact Camuso CPA. Whether you need tax preparation services, assistance with properly reporting gains and income from virtual currencies on your taxes, cryptocurrency portfolio analysis, or any other service provided by a certified accountant, Camuso CPA can help.

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Accounting Industry Rushing Into Cryptocurrency

CPAs are late to the game but also rushing into the cryptocurrency space. As an industry leader in cryptotax services I have been able to observe how this niche sector is developing.

It is not out of the ordinary for me to get targeted with ads from various franchise organizations to “double my accounting fees” by offering crypto tax services with no prior experience. This catches me off guard.

I can only picture how investors are navigating this maze of service offerings and distinguishing from CPAs that have financial services experience and an understanding of crypto between CPAs that have just hopped on this bandwagon.

Analyzing financial transactions are a detailed process that can easily be plagued with costly errors if you do not have a structured process and workflow in place. Analyzing crypto transactions adds another layer of complexity due to the nascency of this industry and the reporting standards from exchanges.

Many CPAs are using a back-offices from another company to actually analyze an investors’ portfolios and do not understand this process. Without the proper experience and training it is very easy for well-meaning accountants to make costly errors related to the portfolio calculations and advisory they provide investors.

Be careful and do you due diligence. At the end of the day your tax return is your responsibility and it is your job to work with an experienced CPA firm to protect your assets.

I would suggest that investors work with a CPA that not only understands and invests in crypto but also a CPA that has a strong background in financial services.

Here at Camuso CPA, we offer a wide array of tax and accounting services for cryptocurrency investors and traders including tax preparation, tax planning and portfolio reconciliations.

If you searching for experienced CPA firms to assist you with reporting cryptocurrency income and capital gains, contact Camuso CPA. Whether you need tax preparation services related to bitcoin transactions, assistance with properly reporting gains and income from cryptocurrencies on your taxes, cryptocurrency portfolio analysis, or any other tax and accounting service, Camuso CPA can help

If you searching for experienced CPA firms to assist you with reporting cryptocurrency income and capital gains, contact Camuso CPA. Whether you need tax preparation services related to bitcoin transactions, assistance with properly reporting gains and income from cryptocurrencies on your taxes, cryptocurrency portfolio analysis, or any other tax and accounting service, Camuso CPA can help

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How Real Estate Agents Save Big on Self-Employment Tax

If you are a real estate agent or broker, you are most likely subject to the self-employment tax. We will go over how you can potentially save thousands on your tax bill.

If you’re like many real estate agents and brokers, you are paid as independent contractor.

As an independent contractor, you are considered self-employed and subject to the full 15.3% self-employment tax. W-2 employees pay 7.65% and their employer pays the other 7.65%

Electing to have you LLC to be taxed as an S-Corporation allows you to hire yourself as a W-2 employee and split your earnings between salary and distributions.

It is very important to work closely with a CPA to set a reasonable compensation for yourself to avoid IRS scrutiny. Creating an entity and electing to be taxed as an S Corp has its advantages and can potentially lower your tax liability, but has many considerations which are warranted before making the tax election and changing your company structure.

Contact our team today to discuss you entity selection in detail as it related to your specific financial circumstances.

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Overstock First Company To Pay Taxes In Cryptocurrency

Overstock, the US online retailer, announced that it will pay a portion of its business taxes in Ohio in Bitcoin.

Earlier in November, the state of Ohio opened a cryptocurrency portal that allows businesses to pay 23 different taxes with the digital currency, ranging from cigarette and tobacco to fuel and sales taxes.

Overstock will pay its eligible commercial activity taxes (CAT) via OhioCrypto.com site starting from next month. Businesses interested in paying their taxes in bitcoin can do so after registering with the new website and signing up with crypto payment processor BitPay.

Do not forget that paying taxes or spending cryptocurrency in any other form is also potentially a taxable event.


Whether you need tax preparation services, assistance with properly reporting gains and income from virtual currencies on your taxes, cryptocurrency portfolio analysis, or any other service provided by a certified accountant, Camuso CPA can help.

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What Meals Can You Deduct After the 2018 Tax Law Changes?

On 22 December 2017, the President signed tax reform legislation known as the Tax Cuts and Jobs Act (TCJA). While the full implications of the Tax Cuts and Jobs Act are still unraveling, a number of tax-planning opportunities have presented themselves.

The Tax Cuts and Jobs Act of 2017 has also made significant changes to the deductibility of business meals and entertainment starting in 2018.

Generally, entertainment expenses are nondeductible and most meals are 50 percent deductible. Previously entertainment expenses were 50 percent deductible and a most meals were 100 percent deductible.

We anticipate this area of tax reform will be heavily scrutinized by the IRS. It is important that your accounting records accurately categorize these activities.

How Does It Work

In order for meals to be considered 50 percent deductible business must be discussed during the meal. If no business is discussed the meal is not deductible for tax purposes and thus should be entered as entertainment. Meals with employees/coworkers where business is discussed along with meals while travelling are considered 50 percent deductible as well. Company activities, such as holiday parties, birthday and anniversary celebrations, picnics, etc. are fully deductible.

Here at Camuso CPA, we offer a wide array of tax services for investors including tax preparation and tax planning. Financial service and technology companies are transitioning from employee driven revenue models to information driven revenue models. Camuso CPA strives to deliver useful insights and offer relevant explanations about the latest tax and financial topics.

Read more

What To Do If You Have Not Reported Your Real Estate Investments On Last Year’s Tax Return

Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.

The IRS can go back up to three years to prosecute cases of tax evasion, and in cases where they find substantial error, they can decide to go back up to six years or more. If you did not report your real estate transactions properly in prior years the best course of action is to file an amended tax return.

Step 1: Calculate Your Tax Liability

When preparing your tax return, you are going to have to figure out your taxable income from your real estate investments for the year. This involves figuring out how much of your assets were sold for capital gains. Additionally, if you own rental properties you will have to determine the amount of taxable income to report from your portfolio.

If doing real estate tax is proving to be a challenging feat, you should consider enlisting the services of a qualified CPA at a professional tax firm such as Camuso CPA.

Step 2: Amend your return

Once you have determined your capital gains and tax liabilities, you should download a current IRS Form 1040X, Amended U.S. Individual Income Tax Return

Step 3: Mail in your amended return

After preparing your amended tax return to reflect your real estate transactions they will be mailed to the IRS along with all applicable tax payments.

While paying taxes can at times be painful, it is very important that you include your real estate businesses and portfolio properly on your tax return. Ultimately, if you choose not to file your gains/losses and/or income, you will be committing blatant tax fraud to which the IRS can enforce a number of penalties, including criminal prosecution, five years in prison, along with a fine of up to $250,000.

Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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How Real Estate Syndicators Are Impacted By Tax Law Changes To Business Interest

Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.

Tax reform, also known as the Tax Cuts and Jobs Act (TCJA), was enacted at the end of 2017, resulting in considerable changes to the federal tax code including a new limitation on the business interest deduction.

Business interest expense was generally deductible under the previous law. Beginning in 2018, however, the business interest deduction may be limited to the sum of a taxpayer’s business interest income for the tax year and thirty percent of the taxpayer’s adjusted taxable income for the tax year.

Syndicators can elect out of this limit by electing to be a real estate trade or business for tax purposes. The drawaback then is that real property has to follow a longer depreciation schedule. And may not be eligible for 100% bonus or accelerated depreciation on property with useful lives of 5,7, or 15 years.

Syndications can be a powerful tax planning tools ,but can also have negative tax consequences if you’re not careful. Be sure to speak with a qualified CPA before investing or starting a syndication.

Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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Tax Implications of Paying Your Employees in Cryptocurrency

Here at Camuso CPA, we offer a wide array of tax services for cryptocurrency investors and traders including tax preparation, tax planning and portfolio reconciliations.

If you’re thinking about paying your employees in a cryptocurrency such as Bitcoin or if you are an employee interested in receiving it as a portion of your pay, there are a few tax implications you need to consider before doing so.

The IRS treats cryptocurrencies as property. Simply holding cryptocurrency, whether it has gained value or lost value, does not mean that you owe taxes. In order to owe taxes, you would have to sell cryptocurrency, trade for another cryptocurrency, or purchase something with it. These are known as taxable events.

This means that if a business uses cryptocurrency as a payment method for employees that there are multiple tax implications. Based on the company’s holding period and cost basis they will be exposed to capital gains liabilities when they use their assets to pay employees. They will still be able to report the employee’s payment as a business expense which is beneficial for taxes.

A taxpayer who receives digital currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received. If a virtual currency is listed on an exchange and the exchange rate is established by market supply and demand, the fair market value of the virtual currency is determined by converting the virtual currency into U.S. dollars (or into another real currency which in turn can be converted into U.S. dollars) at the exchange rate, in a reasonable manner that is consistently applied.

According to the IRS, all payments paid to employees are subject to income withholding requirements regardless of what form of payment the business uses to pay the wage.  Therefore, the fair market value of an employee’s cryptocurrency earnings must be included on that employee’s W-2 form, and these wages will also be subject to federal income tax withholding, Federal Unemployment Tax Act, and Federal Insurance Contributions Act requirements that apply to property-backed payments.

Business owners who are exploring using cryptocurrencies to pay independent contractors and carry out business-to-business payments aren’t immune to information reporting requirements just because they’re using virtual currencies.  So if a company pays rent, salaries, annuities or other compensation using cryptocurrency transactions that are valued at $600 or more—and the recipient is not considered a tax-free entity—the company is required to report the fair market value of each transaction at the time of payment both to the IRS and to the recipient.  If you’re also making payments to independent contractors for services rendered, you would also need to be reported payments valued at over $600 on the contractor’s Form 1099-MISC.  Failure to do could result in hefty fines for your business.

If you searching for CPA firms to assist you with reporting cryptocurrency income and capital gains, contact Camuso CPA. Whether you need tax preparation services, assistance with properly reporting gains and income from virtual currencies on your taxes, cryptocurrency portfolio analysis, or any other service provided by a certified accountant, Camuso CPA can help.

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How To Calculate Depreciation On Rental Portfolios

Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.

How To Calculate Depreciation On Rental Portfolios

If you own a rental property and want to take advantage of the tax breaks one of the most useful tax tools at your disposal is depreciation. Rental property depreciation allows investors to write off the structure and improvements to the property over a period of time. This is non-cash expense that you can use as a write-off on your taxes. Depreciation is one of the biggest benefits to real estate investing because it can reduce reportable net income and therefore, your taxes

Depreciation is the loss in value to a building over time due to age, wear and tear, and deterioration. You can also include land improvements you’ve made and items inside the property that are not part of the building like appliance and carpeting. You can only depreciate the improvements to the structure itself – not the land.

Depreciation deductions are spread out over the useful life of a property. The IRS allows an owner to depreciate the value of the home over a 27.5 year period. The time periods of depreciation can be adjusted based on the components of the property which can offer even larger tax planning opportunities. We cover this in other articles here.

It is important for all real estate investors to deeply understand depreciation and how it applies to their portfolio. There are many tax planning opportunities available related to depreciation.

Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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