If you have taken steps to invest in Bitcoin or any of the hundreds of cryptocurrencies on the market, you’re not alone. These digital assets offer unparalleled portability and transparency and are becoming more than simply the cash of the future. Along with their tremendous potential for growth, cryptocurrencies raise many questions for traders about how to report their gains properly and remain in compliance with the IRS.
An Overview of Cryptocurrency
All cryptocurrencies have their basis in blockchain technology. This system offers a decentralized, open ledger wherein all transactions are transparent while also having a high level of security. Whenever an exchange takes place, an entire network of users dedicated to verifying the data is alerted. Once the details of a transaction are confirmed, they become an irreversible part of the record. If you are involved with blockchain mining, this process is very familiar to you. What may be less clear is how to report the earnings made from this work to the IRS.
As a CPA firm clients in New York City have trusted for years, Goldfine & Company CPA PC is dedicated to ongoing research into new developments in accounting and sharing our knowledge with those we serve. Cryptocurrencies represent the most recent evolution in the modern marketplace, and we have experience with the more than 700 variants being traded on online exchanges, including:
We help clients holding any of these virtual currencies get into compliance before issues arise with the IRS and create an unreasonable burden for them.
Cryptocurrency and Tax Compliance
Cryptocurrencies may not require processing through an intermediary, such as a bank or credit union, but the income received from trading these is still subject to tax. According to the IRS, virtual currency must be treated as property, which is not without its challenges. Gains and losses must be recognized, which means taxpayers have to track their purchases carefully, record transactions, and pay taxes on their profits.
Though there are numerous, unique tax considerations related to virtual currency trading, the support of a dedicated team of professionals makes navigating these complexities a straightforward process. At Goldfine & Company CPA PC, we are available to answer any questions you might have about cryptocurrency transactions and any associated IRS regulations.
Work with Pioneers in the Field of Cryptocurrency Accounting - Contact Us Today!
While cryptocurrency investments are often considered volatile, the guidance offered by our CPA firm is proven to mitigate the tax risks incurred in these transactions. Whether you’ve already begun trading Bitcoin or are looking to add virtual currency to your portfolio, we help you develop strategies that protect your income. To learn more about how Goldfine & Company CPA PC provides sound cryptocurrency advisory in New York City, give us a call today and schedule a consultation.