CRYPTOCURRENCY TAX PREPARATION FOR BUSINESS AND INDIVIDUALS

Are you a Crypto Trader or Miner? Do you know which transactions you need to report to the IRS? Do you know how to calculate your Capital gains or losses?

 

If you have a lot of transactions and move your coins around between wallets and exchanges, calculating your capital gains and losses for cryptocurrencies is not straightforward.

Have you use crypto to pay for goods or services? If yes, it will also affect your results for tax purposes. To accurately calculate your crypto and minimize your tax due, you need to know the cost-basis of every token you own and track the profit when you spend or sell.

We offer crypto accounting services mix with tax preparation, so you get all you need in one place. We offer easy to use tools to keep your data safe, keep track of your profits, and include all your crypto data into your tax return with all your other income, deductions, adjustments, and credits.

PRICING

After completing our questionnaire we are able to provided you with a good estimate of our fees. These fees are made on an estimation of the time it will take us to prepare, review, and finalize the return/project based on the complexity of the services needed. Once we have all the documentation require to complete the tax return we will provide you with our final fee knowing your unique tax and accounting needs.

STARTER

For single exchange users with few transactions

Price:

$480

- Includes Form 1040, Schedule D, and state return

- We do all the accounting and reconciliation of 1 exchange up to 1,000 transactions

- Completed Form 8949 with all your investments reconciled

Does not include any other tax schedules not mentioned. 

Does not include FBAR & FinCen reporting

PROFICIENT

For the ones that like to play the game

Price:

$950

- Includes Form 1040, Schedule D, and state return

- We do all the accounting and reconciliation up to 8 exchanges and up to 3,000 transactions

- Completed Form 8949 with all your investments reconciled

Does not include any other tax schedules not mentioned. 

Does not include FBAR & FinCen reporting

ADVANCED

For the most active traders all is included

Price:

$1,380

- Includes Form 1040, Schedule D, and state return

- We do all the accounting and reconciliation up to 20 exchange and up to 10,000 transactions

- Completed Form 8949 with all your investments reconciled

- Includes one Mining Self Employment Schedule C

- Filing if necessary FinCen 114 and FBAR

Does not include any other tax schedules not mentioned. 

ADD-ONS

In case there is anything else you need!

FinCen & FBAR

If you have an interest in, or signature, or other authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during the year

$200 (After 3 exchanges $50)

Additional State Tax Return

If you need to file in multiple states. Our base offers includes 1 state

$20

Additional K-1s

First K-1 is included in your base price. If you need to include additional K-1's to your tax return

$35

Margin Trading

Up to 10,000 transactions

$350 / mo

FATCA

Requires U.S. taxpayers who hold foreign financial assets with an aggregate value of more than $50,000 to report information about those assets on Form 8938

$200 (After 3 exchanges $50)

Amended Return

If you need to amend previous year tax returns for missing or erroneous information

$125

Reconciliation Regeneration

If you have previous years of reconciliation that need to be redo because it contains errors

Starts at $200

Margin Trading

Up to 50,000 Transactions

$850 / mo

Self Employment

For mining or any other self-employment activity

$130

Schedule E

If you have Rental Property that needs to be included in your tax return (price is per property)

$110

Form 2555

If you have Foreign Earned Income you need to include this form in your tax return

$115

Closing Balance Report

Detail report with your actual information about crypto on hand. Cost-basis and balances

$150

LEARN ABOUT CRYPTO TAX

In 2017, the value of cryptocurrencies increased by an average of 900% and outperformed nearly every other traditional asset class. But with all the buzz and money-making potential also came Uncle Sam demanding his fair share. This raises the question: How do you accurately report your cryptocurrency trades and investments?

Cryptocurrency is Treated as Property

According to the first and only official IRS guidance that was issued in 2014, cryptocurrencies should be treated as property for tax purposes — not currency. This means that crypto’s like Bitcoin, Ethereum, Ripple, and almost all other alt-coins must actually be treated like owning other forms of property (stocks, gold, real-estate) for tax purposes. This means that you are required by law to file your capital gains and losses realized when trading these cryptocurrencies.

So how do you calculate your crypto capital gains/capital losses?

Step 1 — understand what is considered a taxable event

  • Trading cryptocurrency to fiat currency like the US dollar is a taxable event

  • Trading cryptocurrency to cryptocurrency is a taxable event 

  • Using cryptocurrency for goods and services is a taxable event 

  • Giving cryptocurrency as a gift is not a taxable event (the recipient inherits the cost basis; the gift tax still applies if you exceed the gift tax exemption amount)

  • A wallet-to-wallet transfer is not a taxable event 

  • Buying cryptocurrency with USD is not a taxable event. If you hold longer than a year you can realize long-term capital gains (which are about half the rate of short-term) if you hold less than a year you realize short-term capital gains and losses

Step 2 — Determining your Cost Basis

Essentially, cost basis is how much money you put into purchasing the property. For crypto assets, it includes the purchase price plus all other costs associated with purchasing the cryptocurrency. Other costs typically include things like transaction fees and brokerage commissions from the exchanges you purchase crypto from. So to calculate your cost basis you would do the following:

(Purchase Price of Crypto + Other fees) / Quantity of Holding = Cost Basis

Step 3 — Calculate your Capital Gain/Loss

The final step in determining your capital gain or loss is to merely subtract your cost basis from the sale price of your cryptocurrency.

Sale Price — Cost Basis = Capital Gain/Loss

What if I lost money trading crypto?

If you incurred a capital loss rather than a gain on your cryptocurrency trading (like most traders in 2018) you can actually save money on your taxes by filing these losses. 

Determining Fair Market Value

This simple capital gains calculation gets more complicated when you consider a crypto-to-crypto trade scenario (remember this also triggers a taxable event). 

Let’s say you purchase $100 worth of Bitcoin including transaction and brokerage fees. That $100 currently buys about 0.01 Bitcoin. Now let’s say two months later you trade all of your 0.1 Bitcoin for 0.16 Ether. How would you calculate your capital gains for this coin-to-coin trade? Well, turns out, it depends on what the Fair Market Value of Bitcoin was at the time of the trade. Let’s say at the time of the trade, 0.01 Bitcoin was worth $160. This would make the Fair Market Value of 0.01 Bitcoin $160. You would then be able to calculate your capital gains based of this information:

160–100 = $60.00 capital gain

For that crypto-to-crypto trade, you would owe the government a percentage of your $60.00 gain.

This calculation and concept of Fair Market Value sparks a large variety of problems for crypto traders. Some traders have been trading crypto for months, possibly years, and haven’t been keeping track of the dollar value or Fair Market Value of their crypto at the time of the trade. This is information that they actually need to have to accurately file their taxes and avoid problems with the IRS. Depending on the volume of trades they have carried out, calculating gains accurately could become extremely tedious, and potentially impossible to do by hand or even with Excel if they haven’t been keeping track of Fair Market Value. Imagine if you have done thousands of trades over the course of the year like many day-traders have.

the $82,500 threshold. This generates $120 in taxes. In total, the $1000 capital gain would generate $230 in taxes for the year. This is the amount that you owe the government.

Filing Your Crypto Taxes

You need two forms to properly file your crypto taxes: The 8949 and the 1040 Schedule D. You will list all trades onto your 8949 along with the date of the trade, the date you acquired the crypto, the cost basis, your proceeds, and your gain or loss.  Once you have listed every trade, total them up at the bottom, and transfer this amount to your 1040 Schedule D.  Include both of these forms with your yearly tax return.

What happens if I don’t pay my Crypto Taxes?

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.

 

While the IRS has been slow to this point when it comes to dealing with Crypto taxes, they seem to be ramping up. Many exchanges are now required to turn over records for individuals who have $20,000 or more in any transaction (buy/sell/or receive). You will see the IRS start to get very serious when it comes to traders who don’t properly file their gains. 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. In the future, we will likely see software that is specifically built for automatically auditing blockchains. If you chose not to file your gains, you expose yourself to 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.

OUR WORKFLOW

After receiving your answers we can give you a price estimate and also an estimate of when your return can be ready to file.

Approve our quote, sign an agreement and pay the deposit. Provide us with your exchanges information, wallets, etc so we can start working on your bookkeeping

We developed and online easy to fill organizer. Although it will take time to complete, this will works as a reminder of all the events that have tax implications.  

You will received an invitation to use our secure portal. You can also use this link to upload your documents.

We start reviewing your documents and uploading the information into our tax software. We might need to contact you with additional questions

We are ready to show you your tax return, you can ask any question you may have. If anything needs to be update we will do it and schedule another call.

You will received some forms to sign, and your final invoice. We will e-file your tax return, a copy will be available in our portal for future access. 

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©2018 BY ATS BOOKKEEPING AND TAX SERVICES

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