If you are new to cryptocurrency, whether that’s Bitcoin or even NFTs, then chances are you already know about how complicated taxes are in this space. Maybe you’ve sent your crypto information to your go-to tax accountant, crossed fingers, and hoped for the best. The thing is, though, most tax accountants simply do not get the quirks of cryptocurrency. That is where a dedicated crypto tax professional can really shine, revealing things that your average accountant might not mention.
Why Are Crypto Taxes Such a Challenge for Accountants?
Tax accountants are excellent for the more conventional things, such as wages, shares, and property. What about cryptocurrencies, though? They’re a completely different case. Regulations around cryptocurrencies are still developing, frequently complex, and don’t always fall easily into the traditional tax categories.
For instance, exchanging one cryptocurrency for another is not a straightforward transaction. It’s a taxable event for most locations. Therefore, you may be in for some surprises, such as a big tax payment or perhaps an audit later on, if your accountant treats it like transferring funds. They’re not incompetent, exactly. In simple terms, cryptocurrency tax laws require extra care and expertise.
What a Crypto Tax Professional Actually Does
In the tax world, you can consider a crypto tax professional as the crypto expert. They do more than just work with statistics; they know how to categorize various forms of cryptocurrency revenue, figure out profits from complex activities like yield farming or staking, and handle audits centered on digital assets with ease.
Consider the usual accountant as a family doctor who treats any illnesses you suffer from. A crypto tax specialist is someone who knows how to handle the complicated problems that cryptocurrency brings. For example, it’s them who get the strange DeFi transactions that leave others perplexed.
Cryptocurrency Accountant vs. Cryptocurrency Tax Accountant: What’s the Difference?
You may question whether these titles are just different names for the same thing. Not at all. A cryptocurrency accountant mostly handles daily bookkeeping, which includes keeping your bitcoin records organized, categorizing transactions, and making sure everything is in order.
On the flip side, a cryptocurrency tax accountant focuses on the tax side, preparing and filing your tax returns, making sure you’re following the law, and helping you plan so you don’t pay more than you have to.
Here’s a quick way to think about it: if your crypto portfolio were a garden, the cryptocurrency accountant is the gardener who tends to the plants daily. Therefore, you can think that a tax accountant is the landscaper who designs the layout and ensures everything complies with local rules.
Is Your Accountant Clueless About Crypto?
Not sure if your current accountant knows what they’re doing with crypto? Try asking these questions:
- Are you aware of the most recent tax laws related to cryptocurrencies?
- Have you ever dealt with clients who have complicated cryptocurrency transactions, such as DeFi or staking?
- Do you track cryptocurrency transactions by using any specialized software?
It could be time to seek an alternative option or work with a crypto tax specialist if their responses seem unclear or ambiguous.
The Takeaway: Don’t Let Tax Mistakes Cost You
It can be quite overwhelming when managing cryptocurrency taxes. Nonetheless, you can steer clear of pricey errors and control your finances if you’ve got the right team by your side, which includes a skilled cryptocurrency tax accountant, a savvy crypto tax professional, and a knowledgeable cryptocurrency accountant.
In the rapidly growing world of cryptocurrency, being cautious is not only a wise choice but also necessary when it comes to taxes, which is why you must hire experts who have a better understanding of the area rather than just your average tax accountant.
If you’re serious about protecting your crypto investments and keeping your peace of mind, finding the right crypto tax professional is a step worth taking.
