Tax Preparation And Your Cryptocurrency

Anyone who is involved in cryptocurrency will probably need professional guidance with their Tax Preparation. The rules and regulations regarding taxes on cryptocurrency are confusing. Even accountants disagree on what the law states concerning taxes on cryptocurrency.

Understanding Capital Gains

One of the easiest rules to understand about cryptocurrency profits concerns capital gains. If a cryptocurrency is held for less than a year, the profits will be short-term capital gains. These gains can be taxed at a rate of up to 37%. If a cryptocurrency is held for longer than a year, it will be taxed under the rules for long-term capital gains. That means there is a limit of 20% on the tax. In some cases, the long-term tax can be zero. Visit Rawcpa.com to get help on taxes.

Keeping Records

When a person invests in cryptocurrency, they will have to keep their records for Tax Preparation. Most cryptocurrency exchanges make it easy for customers to download their trading records. It’s important to keep track of profits and losses from every cryptocurrency trade. Even after taxes have been paid, the records should be kept in case of an audit. Since the government is still putting together rules for the cryptocurrency, an audit might be more likely for a big earner.

Finding Help

Although cryptocurrency continues to gain in popularity, it still can be hard to find accountants who can help with the taxes. Anyone who has serious profits should definitely invest their time in a search for an accountant who has some understanding of the current tax rules for cryptocurrency. A person might have tens of thousands of dollars or more that they owe taxes on. Making a mistake with a large amount of money can have dire consequences. Some accountants actually advertise to cryptocurrency holders, so it shouldn’t be too hard to find help.

Some people haven’t reported their cryptocurrency income because they are confused about taxes. That’s a big mistake. At the very least, they should report something if they have converted the profits to fiat. An accountant can help bring some clarity to the situation and make sure a person doesn’t get into trouble.

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