As we celebrate the massive growth of the cryptocurrency market, be sure not to get caught off guard by the massive crypto tax bill that is looming just ahead.
The last quarter of 2020 saw unprecedented, record breaking crypto price appreciation and trading:
- The overall crypto market cap increased by almost 300%
- Bitcoin shattered records and many other crypto assets climbed to all-time highs
- The SEC sued Ripple leading to the XRP Token being delisting by exchanges, being sold off by investor funds and being suspended for trading.
But keep in mind, whether the crypto was sold for USD, used to make a purchase, used to earn DeFi income, or traded into another cryptocurrency, each of these creates a taxable event. The booming cypto industry may be great for our economic outlook, but be warned for the massive crypto tax bill that is incoming following that prosperity
Traditional tax packages do not support crypto-assets and cannot accurately account for all cryptocurrency transactions. Consumers and businesses may receive a 1099-K from their exchange, but the information it contains is not useful for filing taxes.
Ledgible Tax Pro from Verady is a SOC Audited platform for tax planning and reporting on crypto-assets. It produces the IRS Form 8949 and other reporting formats that are directly importable to professional tax packages.
So unless your clients are just holding their crypto, whatever they’ve done has created taxable events and you’ll be checking ‘Yes’ to the virtual currency question on their 1040. Are you ready?
