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WHAT TO DO IF YOU STILL HAVE NOT REPORTED CRYPTOCURRENCY TAXES THIS YEAR

With an exponential gain in value and thousands of businesses now accepting it as a form of payment, Bitcoin has quickly become one of the trending topics throughout the country. While there are various types of cryptocurrency out there, Bitcoin is currently the most popular form of digital currency (also known as virtual or cryptocurrency) throughout the world and is able to be exchanged for U.S dollars, Euros, and other real currency. In addition, Bitcoin can be traded for other virtual currencies, such as Ripple or Ethereum currency.

Whether people use cryptocurrencies to pay for products and services or strictly for investment purposes, they may not be aware that they have a possible taxable impact. If you have not reported your cryptocurrency taxes this year, you are not alone. In this article, we are going to review cryptocurrency and taxes, as well as what to do it you still have not reported them.

Before diving into the details of digital currency and taxes, we wanted to ensure our readers that while this article provides helpful and detailed information, it does not constitute professional financial counsel and should not be used as a replacement for tax advice from professional CPA firms. As such, we recommend reaching out to local CPA firms for individualized service that is tailored to your unique tax situation.

Do You Have To Pay Cryptocurrency Taxes?

In the past, many cryptocurrency investors pocketed profits and avoided taxation by selling virtual currency and putting the money made back into other digital tokens. This method, and loophole so to speak, is known as a like-kind exchange. However, with the value of cryptocurrency taking off this past year, along with the profits of investors, the IRS is holding it down come tax season. In addition to closing this loophole that many crypto holders used, the IRS has stated that cryptocurrency is considered property and that selling digital currency should be reported as a capital gain or loss. But what does this mean? Well, this means that selling certain virtual currencies in exchange for another virtual coin, or even using cryptocurrency to buy goods and services, is considered taxable and therefore should be reported come tax season. It is mandated by law that you pay taxes on those earnings.

What Happens If You Do Not Report Cryptocurrency Capital Gains?

Some cryptocurrency investors, despite the IRS’s warnings, still choose to hide their profits by not reporting their capital gains from virtual currencies. This is no surprise, especially after a past survey revealed that over 35 percent of cryptocurrency owners claimed they do not plan on reporting any gains or losses on their tax return. What many investors in this percentage may not be aware of is that not reporting their capital gains and losses is a form of blatant tax fraud. Purposefully hiding profits and failing to report capital gains can enable the IRS to enforce numerous penalties, such as criminal prosecution, which is generally used in more extreme cases that involve larger profits and capital gains. Those that commit this tax fraud can potentially face up to five years in prison. What’s more, there is generally a fine up to $250,000. Similarly, crypto investors that purposely file a false tax return to hide capital gains may have to pay a $250,000 fine, as well as face up to three years in prison.

Of course, keeping track of all of the transactions made with virtual currency is not always easy. There are not any promises that distributed digital currency exchanges are going to send a Form 1099 that details your trades as well as your profits and losses. Not to mention, if virtual coins were used to pay for goods and services, that is a taxable transaction that you will have to handle entirely on your own. While crypto transactions can be complex, the IRS and government fully expect us to comply with the set tax guidelines for cryptocurrency. Failing to do so can lead to further complications and issues down the like.

What If You Didn’t Report Capital Gains From Cryptocurrency?

Failing to report your capital gains is something that happens more often than people think, whether it is accidental or purposely. However, reporting these gains is the law and should be done to avoid any trouble. If you failed to report any income or capital gains on your taxes, or if you are uncertain whether or not you compiled within the guidelines set by the IRS, there are certain steps you can take to reduce the risk of being fined, or worse, facing criminal penalties. The right thing to do in this situation is to file your tax return immediately and pay as much tax owed as possible to avoid any additional penalties. While it is dependant on which reporting requirements you are subject to, in addition to the nature of the noncompliance, if you did not report your capital gains it may be best to:

  • Create a corrected Form W-2 using Form W-2c if you paid people with cryptocurrency
  • File a corrected Form 1099-MISC if you paid independent contractors with digital currency.
  • File an FBAR, or a Report of Foreign Bank and Financial Accounts to disclose foreign digital currency wallets.
  • Enroll in the Offshore Voluntary Disclosure Program to help reduce any potential fines and penalties and avoid jail time.
  • Get help from a local tax consultant.

While taking these steps can potentially help reduce any fines and penalties, or even protect you from criminal prosecution, if you still have not reported your cryptocurrency income and capital gains, it is vital that you discuss your situation with an experienced tax CPA that specializes in Bitcoin and other digital currencies. If you have questions about reporting virtual currencies on your taxes, a certified CPA should be able to assist you.

What Happens If You Owe and Do Not File or Pay Your Taxes?

When your taxes are late or not paid, the IRS will assess a failure-to-pay penalty. This penalty goes into effect after the regular due date. Typically these penalties are a certain interest charge of the balance due for each month or part of a month you are late.

Once the IRS discovers that your taxes are late, they will begin to send you computer paragraph (CP) notices. These notices will show how much you owe and demand immediate payment. If no actions are taken, the notices will continue to pop up in your mailbox for two to six months. If you avoid the notices and still do not pay the owed taxes, the following can occur.

Tax Levy

When the IRS seizes your assets, it is known as a tax levy. A tax levy only happens when all forms of communication and arrangements are ignored. The final notice will be sent at least 30 days before further action is taken.

Wage Garnishment

A wage garnishment, also known as a wage levy, is when the IRS contacts your employment provider and demand a portion of your paycheck. This will occur during every pay period until the taxes are paid in full or a payment agreement with the IRS is reached.

Bank Levy

A bank levy is when the IRS contacts your bank. When this happens, your bank will instantly freeze your accounts so you are unable to take money out. If arrangements are not made, the bank will send money to the IRS about three weeks later. This of course is something that shouldn’t be taken lightly.

Asset Seizure

The IRS has the ability to seize various assets like vehicles, houses, boats, and other assets if the owed taxes are not paid and an agreement has not been reached. This is something you will want to avoid, as getting seized property back can often be a long and difficult process.

Passport Revocation or Suspension

Many people don’t know this, but the IRS can revoke or suspend the passports of delinquent taxpayers who owe more than $50,000 in taxes (including interest and other non-payment penalties). Not to mention, the State Department will likely not issue or renew your passport if you owe more than 50K.

Criminal Prosecution

If you continue to file a tax return year after year, or you avoid paying the taxes that you owe you could be faced with criminal charges. Criminal prosecution is typically tied to tax evasion or tax fraud and since the government prefers working with non-compliant taxpayers. Since proof of intent to defraud is hard to prove, the IRS looks will generally search for patterns of abuse before taking any case to a criminal investigation

Again, if you fail to pay your taxes, most of these penalties and negative consequences can be prevented by working with a tax professional or the IRS directly.

https://www.camusocpa.com/contact/#/

If you searching for local CPA firms in Charlotte 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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PORTUGAL PROVIDES HIGHLY ANTICIPATED TAX CLARITY FOR THE EU

The Portuguese Tax Authority (PTA) is one of few countries that has taken specific steps to create a framework defined framework for cryptocurrency taxation, helping to provide a great amount of clarity on the murky subject.

This came a result of an unidentified company seeking guidance on whether or not its token was covered by value added tax (VAT) exemptions similar to what are offered for legal tender. The announcement, like most tax provisions, contain general provisions and exemptions as noted below:

Transactions that contain a token could, in principle, be considered as a critical transfer of goods and result in a VAT liability. However, the PTA acknowledged that the digital coins could be eligible for the legal tender VAT exemption.

The PTA explained that the exemption would only be applicable in instances where the transfer of the tokens occurs in an alternate form of payment. This means that, the tokens most likely would be exempt if they are exchanged using a defined legal currency.

Since the VAT system is used among all European Union (EU) member states, the decision by the PTA most likely will be mirrored throughout EU states. This is a large step forward for the global crypto-community who is looking to move the industry forward by aligning with new regulations for mainstream adoption.

Are you looking for a CPA in for cryptocurrency tax help? Give Camuso CPA a call today. We also offer a host of other tax services for your benefit. For more information on how our services can help you, please do not hesitate to give us a call at your earliest convenience. One of our friendly and knowledgeable representatives will be happy to answer any questions that you may have.

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AICPA REQUESTS FURTHER GUIDANCE FROM IRS ON CRYPTOCURRENCY

The American Institute of Certified Public Accountants which is the world’s largest association of accounting professionals asked the IRS to issue immediate, updated guidance regarding the tax treatment of cryptocurrency transactions. The first IRS tax guidance for cryptocurrencies was introduced March 2014, few CPAs have done comprehensive analyses of the record-keeping and enforcement challenges that will arise from the IRS designation of Bitcoin as property rather than currency.

The AICPA’s submission to the IRS includes suggested Frequently Asked Questions that address the following areas:

  1. Expenses of obtaining virtual currency
  2. Acceptable valuation and documentation
  3. Computation of gains and losses
  4. Need for a de minimis election
  5. Valuation for charitable contribution purposes
  6. Virtual currency events
  7. Virtual currency held and used by a dealer
  8. Traders and dealers of virtual currency
  9. Treatment under Sec. 1031
  10. Treatment under Sec. 453
  11. Holding virtual currency in a retirement account
  12. Foreign reporting requirements for virtual currency

The lack of guidance around the taxation of cryptocurrencies pose uncertainties to the taxation of cryptocurrency and blockchain technology transactions. Additional guidance is largely overdue. Our team along with industry participants are awaiting answers and clarification from the IRS.

Are you looking for a CPA in for cryptocurrency tax help? Give Camuso CPA a call today. We also offer a host of other tax services for your benefit. For more information on how our services can help you, please do not hesitate to give us a call at your earliest convenience. One of our friendly and knowledgeable representatives will be happy to answer any questions that you may have.

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CRYPTOCURRENCY DIVESTMENT TAX PLANNING STRATEGY: CHARITABLE REMAINDER TRUSTS

Here at Camuso CPA, we offer cryptocurrency tax planning and estate planning services in Charlotte to clients across the country. 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 when it comes to taxes . 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 charitable remainder trusts, a overlooked tax deferral methods for appreciated cryptocurrency.

Capital gains take a large portion of investors wealth, specifically when selling low cost basis short term assets. Charitable remainder trusts offer a way to sell immediately while still deferring this capital gains income over a much longer period, such as 20 years or even a lifetime. This method also provides benefit to charity, with a corresponding charitable deduction.

Charitable remainder trusts can be an effective tool for converting cryptocurrency into higher income producing assets. Charitable remainder trusts may accept cryptocurrency as an asset, and then pay the net income generated by the property to the trust beneficiaries or sell the property and then pay a fixed percentage of the value of the assets.

A charitable remainder trust is an irrevocable trust that provides for and maintains two sets of beneficiaries. First is the income beneficiary. The income beneficiary receives a set percentage of income from the trust for life or a term of up to 20 years. The second is the charitable beneficiary. This could be one or more charitable organizations that receive the principal of the trust after the income beneficiaries pass away.

A charitable remainder trust can sell a property, reinvest the proceeds into a diversified portfolio of securities, and pay a percent of the trust value, all without any capital gains tax liability for the donor. This is a very useful tool to strategically minimize cryptocurrency taxes.

TAX BENEFITS

  1. The sale or exchange of cryptocurrency is completely tax-free
  2. You only pay tax each year on the annual payment you receive from the trust. This payment would be taxed at favorable capital gains rates. Depending on the amount of your other annual income, this strategy will likely keep you in the lower capital gains brackets.
  3. In the year of trust creation, you receive an income tax deduction equal to the actuarial value of the charity’s projected gift.This actuarial value is a calculation done by your CPA. The smaller the payment you select, the larger the charitable deduction. Assuming you choose an appropriate charity, the deduction can be used to reduce up to 30 percent of your income in a given year, and any unusable amount carries forward for up to five future years.

There are many technical considerations when tax planning for charitable remainder trust and cryptocurrencies. Most important, the IRS requires that the actuarial value of the charity’s share must be at least 10 percent of the assets contributed to the trust. Be sure to consult with appropriate counsel to ensure you meet the 10 percent rule and other technical requirements.

If you are holding substantial cryptocurrency assets at a low cost basis and are looking for effective long term tax planning and estate planning strategies, Camuso CPA can help! Please feel free to give us a call for more information about cryptocurrency and other tax planning 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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Important Wash Sales Update for Cryptocurrency Investors and Traders

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.

This indication by the SEC has implications investors may not first consider from a tax perspective. 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, since Bitcoin and Ethereum have not been labeled a stock or security, the IRS can only tax traders for non-economic substance transactions under property rules. These transactions are similar to wash sales, considering the volatility of crypto markets and the potential argument that investors made late trades in response to market-moving news as opposed to tax motivations, traders have a legitimate position on the matter.

Contact Us Today

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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Experienced CryptoCPA: Definitive Guide to 2018 Masternode Taxation & Tax Planning

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.

In our Experienced CryptoCPA Tax Topics & Guides segment, we are taking a more in depth approach in covering all things cryptocurrency, tax, real estate and finance.

Just about every virtual currency transaction; from mining and spending to trading and exchanging, will be a taxable event for U.S. tax purposes. According to Uncle Sam, Bitcoin and other cryptos are classified as property. In our latest episode, we will go over how cryptocurrency masternode activity is taxed and how business owners and investors should prepare for this tax season.

Contact Us Today

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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Tax Planning For Cryptocurrency and Wash Sales — How Can You Minimize Taxes

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.

In our Experienced CryptoCPA Tax Topics & Guides segment, we are taking a more in depth approach in covering all things cryptocurrency, tax, real estate and finance.

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.

Contact Us Today

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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Spending Cryptocurrency Can Be A Huge Tax Trap, Learn How

With an exponential gain in value and thousands of businesses now accepting it as a form of payment, Bitcoin has quickly become one of the trending topics throughout the country. While there are various types of cryptocurrency out there, Bitcoin is currently the most popular form of digital currency (also known as virtual or cryptocurrency) throughout the world and is able to be exchanged for U.S dollars, Euros, and other real currency. In addition, Bitcoin can be traded for other virtual currencies, such as Ripple or Ethereum currency.

Whether people use cryptocurrencies to pay for products and services or strictly for investment purposes, they may not be aware that they have a possible taxable impact.

If a taxpayer purchases s virtual currency and uses it to purchase something (trades the cryptocurrecy for a good or service), the IRS requires him to calculate a capital gain or loss on each transaction. Capital gains on personal-use property are reportable and subject to tax.

The AICPA recently asked the IRS for some equitable relief by adopting a “de minimus election,” which provides a $200 threshold for excluding capital gains income on personal transactions. This is not yet in effect and as a result, taxpayers are on the hook for tax liability with all cryptocurrency transactions.

https://www.camusocpa.com/contact/

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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CRYPTOCURRENCY TAX RETURNS: SHOULD YOU PREPARE YOUR OWN?

Many people have reaped some serious rewards from their cryptocurrency investments. It’s a lucrative new monetary medium that many people are getting behind. But because it is new, it becomes harder to navigate when tax season comes around. Taxes can be hard enough to understand when you are dealing with normal income, and many people end up leaving money on the table. Mistakes become much more likely when dealing with cryptocurrencies, so we make the argument that filing cryptocurrency tax returns should be left up to the professionals. Here’s why.

IT’S GOING MAINSTREAM

Cryptocurrencies, especially the big ones like Bitcoin, are becoming more mainstream than ever. That means that the IRS is cracking down on them come tax season. While many have been able to under report their virtual currency assets in the past, this practice is fast becoming inviable. In fact, the IRS has recently filed a suit in court against Coinbase, which is one of the largest cyrpto exchanges in the United States, in order to find information on potential tax evaders. This is not a good time to be making mistakes on cryptocurrency tax returns.

PROFESSIONALS ARE KNOWLEDGEABLE

Cryptocurrencies are in an unusual middle ground where the IRS is now cracking down on them, but even many licensed CPAs are struggling to understand the new tax law. So, to navigate, it’s important to not only find a professional in tax law, but one who is current on cryptocurrency tax law as well. Here at Camuso CPA, we have all the knowledge necessary to save you as much money as possible on your cryptocurrency tax returns. That puts us on the cutting edge of a brand new financial trend. When it comes to protecting your investments in the form of cryptocurrencies, Camuso CPA is one of the few CPA firms that can work with you to ensure you are compliant with tax law.

AVOID AUDITS/COURT

Even something as simple as human error on a tax return can result in an audit by the IRS. For investors out there, this poses a significant problem when trying to report income. By hiring out to a professional CPA firm, that firm can assume responsibility for the veracity of your tax returns. Considering how busy many investors are, the savings on time alone can be enough to justify cryptocurrency CPA services. An audit alone is stressful enough, but having to go to federal court to prove you earned your wealth legally is a real drain on both time and resources.

Hopefully we’ve explained the necessity for CPA tax help when it comes to cryptocurrency tax returns succinctly enough. Here at Camuso CPA, we are proud to help people in the Charlotte area save money on their tax returns. If you would like to know more about how our cryptocurrency tax services can benefit you, please do not hesitate to reach out to us at your earliest convenience. One of our friendly and knowledgeable representatives will be happy to answer any questions that you may have.

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CRYPTO BECOMES FASTEST GROWING FIDELITY CHARITABLE DONATION

Here at Camuso CPA, we offer CPA tax help for cryptocurrencies in Charlotte. Navigating the waters of the tax regulations for this new monetary medium can be tough. But, it is still well worth it to invest in this exciting new opportunity. In fact, there are so many people making money off of cryptocurrencies that Fidelity Charitable has reported that cryptocurrencies are their fastest growing charitable donation. We want to dive into the details of this phenomenon here a little further.

CRYPTO AND FIDELITY CHARITABLE

On February 14, Fidelity Charitable announced that it received $69 million from cryptocurrencies in the year 2017. This made it the fastest growing type of charitable donation given to the firm. Most of these donations were made with bitcoin and ether, and came from 169 separate donors. This is a full tenfold increase in cryptocurrency donations since the firm began accepting bitcoin back in 2015, putting cryptos at a 140 percent faster growth rate than other donation options like real estate and shares of LLCs.

Actually, cryptocurrencies have been using donations as a key crux to the case for their adoption since their inception. Back in 2013, BitGive began to help non profits become able to accept cryptocurrency donations, attracting a handful of big names to give the idea a trial. The very next year, Coinbase began its own service initiative to support non profits.

While Fidelity Charitable is seeing faster growth with cryptocurrency donations than other types of donations, it is an early adopter paving the way. It started accepting cryptos in 2015, but didn’t see much traction in the funding mechanism until 2017, after the firm began a huge marketing campaign to inform people cryptocurrency donation options. By November of 2017, Fidelity Charitable had gone from $11 million in donations to $22 million over a short time span, possibly coinciding with a tweet by bitcoin developer Gavin Anderson mentioning that he himself used the platform. Donations took off from there, and by the following month, the firm had seen an additional $36 million in donations.

TAX INCENTIVE

There are benefits that cryptocurrency investors can reap through tax incentives regarding charitable cryptocurrency donations. That is because Fidelity Charitable offers an “investor managed fund”, allowing cyrpto investors to donate assets including cryptocurrency without needing to pay capital gains taxes. Because of this, the firm typically sees an increase in donations the higher the tax bracket that a donor is in. And while cryptos still haven’t taken up the lion’s share of the market when it comes to traditional donation types, they are set up to make a major impact on charitable giving in the future.

Are you looking for a CPA in Charlotte for cryptocurrency tax help? Give Camuso CPA a call today. We also offer a host of other tax services for your benefit. For more information on how our services can help you, please do not hesitate to give us a call at your earliest convenience. One of our friendly and knowledgeable representatives will be happy to answer any questions that you may have.

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