What To Do If Your Accountant Isn’t Crypto Savvy
As crypto becomes more prevalent, individuals and businesses are facing a common dilemma during tax season: their current accountant doesn’t understand the intricacies of cryptocurrency taxation.
Even after working with your accountant for years, a knowledge gap surrounding crypto tax may lead you to look elsewhere. At the same time, you’ve built a strong relationship with your accountant, and you’re satisfied with the other aspects of their services. Is there a way to ensure accurate and compliant crypto tax returns without losing the continuity of your current accountant?
Instead of enduring the stress and uncertainty of switching accountants altogether, consider bridging the gap by hiring a dedicated crypto tax expert.
Traditional Accountants vs. Crypto Tax Accountants
Before exploring how a crypto tax accountant can work alongside your traditional accountant, let’s evaluate some of the key differences.
For example, consider how a traditional accountant would handle missing transaction data. Through familiar bank statements, receipts, financial reports, and analysis, the gapped data can be either located or estimated. With crypto, however, the process isn’t as straightforward. Here, a crypto tax expert would delve into the blockchain to reconstruct the data. The technical proficiency required to compliantly carry out blockchain tracing oftentimes goes beyond the scope of traditional accountants.
Additionally, most traditional accountants lack exposure to relatively new concepts such as cryptocurrency staking. While a crypto tax expert would understand how to classify, value, and report staking income in accordance with IRS tax codes, a traditional accountant is more likely to omit or misclassify these types of activities. As a result, costly fines and audits can follow suit.
In addition to their current expertise, crypto tax accountants have the added advantage of up-to-date regulatory insight through their in-depth community engagement. On the other hand, traditional accountants generally reserve their focus for regulatory changes such as ASC 606 or new GAAP accounting standards. Even with a basic understanding of crypto tax law, they lack the depth and upkeep of a crypto tax expert. Given the ever-evolving regulatory landscape surrounding crypto, the most current knowledge is essential for compliant tax reporting and relevant advice.
How Crypto Tax Experts Work Alongside Accountants
Crypto tax experts are accustomed to working hand-in-hand with traditional accountants, given the increasing demand for their specialized knowledge. In turn, the process is both seamless and accurate.
The crypto tax process includes classifying transactions such as airdrops and trading activity across your wallets and exchanges, calculating capital gains and losses, and completing tax forms such as Schedule D and Form 8949 and beyond. Once finished, these experts can provide your accountant with the reports they need to file an accurate tax return while offering specific guidance for any uncertainties.
Through the specialized knowledge of a crypto tax expert, your accountant can alleviate the risk of costly errors and omissions while navigating the nuances of your crypto activities with precision for an optimized tax outcome. Although the process involves two separate professionals, the coordination along the way can oftentimes have the same feel as a unified office.
Getting Started with a Full Crypto Tax Review
For certainty, you can count on “The Borderless Accountant”. My crypto tax review services are here to help. In turn, I offer the peace of mind that comes from reconciling past mistakes with corrective action recommendations to ensure historical compliance.
I encourage you to get in touch or explore my website for a full look at my basic and in-depth crypto tax review services. Thank you for reading.