A couple years ago, nobody was really talking about cryptocurrency taxes. As a list of cryptocurrencies such as Bitcoin and Ethereum continued to attract exposure, the IRS began upping its efforts to track digital asset investors. A couple years ago, it was extremely confusing for the average investor to report their transactions. During this time, companies were building seemingless interfaces to help these individuals cope with IRS guidelines.
IRS Gets Involved With Cryptocurrency
Back in December of 2019, it was reported that the IRS had issued a new tax form that made it mandatory for cryptocurrency investors to report their transactions. At first, many people were confused as to what constituted as a “reportable event.” When the IRS issued their new tax forms, there was a dedicated section that specifically stated:
“At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”
Even though the statement above was outlined, it was still confusing to many investors and traders. The reason for this is because there can be a lot of “movement” of crypto to different destinations. For example, an investor may purchase Bitcoin on an exchange and then the Bitcoin sits on the exchange wallet. That same user may want to hold that Bitcoin in an “offline wallet” also known as cold storage. In order to do so, that individual will have to transfer the Bitcoin from the exchange to his/her cold storage wallet. This could easily confuse the average investor / trader for reporting purposes.
Cryptocurrency Accounting Software
There are a few companies that are building awesome infrastructure around cryptocurrency taxation. The crypto environment by large is very developer heavy. Despite the market growing in popularity, you can argue there’s still so much confusion around areas like investing and taxation. Risk averse individuals aren’t going to invest if important areas like taxes aren’t addressed. It was crucial for startups in the space to focus on UI/UX when building these solutions.
With all the nerves mounting around 2019 crypto taxes, firms like CryptoTrader.Tax are absolutely hitting the spot. For one of the first times ever, investors and traders can literally get a report in minutes on hundreds of transactions. One of the obstacles in cryptocurrency is that many investors have assets on multiple exchanges. It’s completely different from the stock market where an individual might have all their stocks with one broker. In cryptocurrency it can get confusing fast. The CryptoTrader.Tax walks you through a series of steps to literally import all your transactions in seconds. They are very familiar with the top exchanges in cryptocurrency, allowing you to easily upload all your data from those entities. Upon connecting your exchanges and uploading data, CryptoTrader.Tax was able to calculate your reportable metrics in seconds.
TurboTax Cryptocurrency Integration
Getting your cryptocurrency transactions together is one task, but reporting them is another. CryptoTrader.Tax continued to conquer user experience with its integration on TurboTax. If individuals file their taxes on TurboTax, the platform literally gives you the opportunity to upload your transaction report from CryptoTrader.Tax. TurboTax is very familiar with what the company is doing and is welcoming their service by integrating it during the filing process. Once a report is generated by CryptoTrader.Tax, all the user has to do is download the report to their computer and then upload it on TurboTax. The experience has completely changed for the better.
As Cryptocurrency and digital assets continue to gain market acceptance, it will be important for areas such as accounting to be prioritized. Startups like CryptoTrader.Tax are really aiding mass adoption in a sense. It’s worth noting that the average individual accountant still struggles to understand the industry due to rapid growth. Companies building out software protocols to conquer this industry are really doing something special…
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