How to navigate cryptocurrency tax implications amidst the CPA shortage

The topic of cryptocurrency is hot worldwide. This is especially true with the prices of Bitcoin (BTC), Ethereum(ETH) and other cryptocurrencies hitting higher thresholds, resulting in another record year for investors. Although the earnings may look great on paper, there is one thing that investors need to be aware of: crypto taxes.
It’s not unusual for traders to profit from the constant fluctuations. They may buy the dip, then sell the uptrend and do it again. Each transaction is a taxable event which makes the discussion about cryptocurrency taxes difficult.
The imminent crackdown on cryptocurrency taxes only encourages us to have a conversation. The crackdown on cryptocurrency taxation is not new. In 2021, an IRS chief stated that the country was losing trillions in unpaid taxes every year. A large portion of this loss could be attributed to the cryptocurrency market. There are currently several subpoenas against Coinbase, Kraken and Poloniex, which require these exchanges to provide the IRS with information.
These events have prompted the IRS to seize billions in cryptocurrency, which may be connected with tax fraud. Although some of these actions may seem extreme, especially when compared to one’s own calculations errors, it is important to remember that only those who are deliberately avoiding taxes will be affected by the harsh crackdown.

The IRS and crypto investors

The IRS recognized that investors are taking part in digital currency markets more than ever before. This is partly a result of hype, but also due to the large amount of money that the government distributed during the COVID-19 pandemic. The number of cryptocurrency traders in the United States grew rapidly due to more investors having access to discretionary income. Grayscale Investments estimates that 55% of American investors currently hold Bitcoin.
This is why the 2021 IRS Form 1040 asks recipients if they have ever received, sold or exchanged virtual currency. In response, users must choose whether to check the “Yes” or “No” boxes. Further proof of their crackdown is the IRS placing this question directly below a taxpayer’s name and address. This location cannot be missed. Clarifications have been made to clarify that the amended form would only allow for taxable events such as receiving cryptocurrency as payment, airdrops or exchanging different currencies, selling assets, mining, and staking.

The effects of the great resignation

The next step is crypto tax management. This involves figuring out the balance due. The IRS has made it known that cryptocurrency/virtual currencies are considered property. Users must report any gains or losses that are taxable. Failure to do so could result in an audit, interest payments and severe penalties. Many people have turned to professional crypto accountants for help.
In a traditional, pre-pandemic year, 15% of staff have left one of the big four accounting firms, including Ernst & Young (EY), Deloitte, KPMG and PricewaterhouseCoopers (PwC). While it is not certain if these statistics will change, many firms believe that the turnover rates this year will be higher than previous years.
After another year of the pandemic, this year has seen the profession as a whole become overworked, and underpaid. Due to the continuing economic trend known as the Great Resignation 40% of accountants have quit the CPA industry. This has led to a severe shortage of professionals. As the law of supply and demand states, a decrease in supply means increased prices and fewer chances for an investor to get the tax help they need.
Even those with sufficient funds, it is possible to find a CPA who has the expertise in crypto tax.

Manage your cryptocurrency taxes

Users don’t have to navigate the complicated tax landscape alone, even though they may have fewer resources. New crypto tax software makes it easier for users to organize crypto data and calculate tax liability.
Accointing is one of these offerings. It integrates over 400 currencies, such as BitMex and Kraken. This allows users to access data in one location. The software automatically calculates a trader’s wins, losses, and classifies transactions such as margin trading, decentralized finance (DeFi), and mining.
You can find more information about Accointing here. A member of their team described it as “Accointing”: “Accointing, a simple and beautifully designed platform that allows users to handle crypto taxes themselves, without the need to have a CPA process data. By giving the output from Accounting’s crypto-tax calculator to a CPA or using the TurboTax output, users can file their annual income and taxable gains to IRS.
In just five clicks, users will be able to generate a custom cryptocurrency tax report for the country they reside in. Investors can also use the “holding time tool” to optimize transactions by recognizing tokens that have been held for more than a year.
Accointing allows users to navigate the complex tax landscape of cryptocurrency and avoid fighting for an accounting force.
Find out more about Accointing

Disclaimer. Disclaimer.Cointelegraph does not endorse the content or products on this page. We do our best to provide you with the most relevant information we can find. However, readers are responsible for doing their research and should not rely on this article as investment advice.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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