Decrypted Tax: Your Guide to Cryptocurrency Tax Compliance

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Digital assets have captured the attention of many individuals, from casual traders to full-time investors. This growing interest is hardly surprising, given their immense potential for high returns. However, following this excitement, there's a crucial aspect often overlooked—the tax implications of trading digital assets.

Unknown to many, digital assets are subjected to tax regulations, much like any other form of investment property. In fact, in many countries, digital assets are considered property. Therefore, the same tax principles that apply to properties also apply to these digital assets. Every time one sells, trades, or uses them, they create a taxable event.

One of the tax considerations for crypto traders is capital gains tax. The profit made when a crypto is sold for more than it's paid for is considered a capital gain. These gains can be classified as short-term or long-term, depending on how long the asset was held before selling. Short-term capital gains (assets held for less than a year) are often taxed at a higher rate than long-term ones (assets held for over a year).

It's worth emphasizing that every transaction, regardless of size, must be reported to the tax authorities. The problem is that many individuals fail to report their activities accurately. A survey conducted last year by Decrypted Tax revealed a significant gap in tax filing among cryptocurrency holders. "This non-compliance might be due to a mere lack of awareness, the perceived complexity of tax regulations, or the mistaken belief that crypto transactions are untraceable," shares Managing Partner Ernest Lee. "We want everyone to know that not reporting these transactions can lead to penalties, such as fines, interest on unpaid taxes, and even criminal charges in severe cases."

Decrypted Tax, therefore, made it its mission to address this widespread issue by offering specialized tax preparation services for the crypto community. It aims to help clients save time, minimize tax liabilities, and fully comply with US tax reporting requirements. The firm ensures this by utilizing cutting-edge tax software that simplifies the management of crypto and decentralized finance (DeFi) tax requirements.

Lee acknowledges the limitations of the existing data aggregation software and the importance of a robust audit trail. Therefore, Decrypted Tax partnered with NODE40, a leading data analysis and accounting solutions provider for businesses and high-net-worth individuals. With this, the firm ensures precise calculations, verifiable audit trails, and full compliance with Internal Revenue Service (IRS) requirements.

Decrypted Tax is known for its comprehensive services. These include preparing and reviewing Forms 8949 and Schedule D, ordinary income and capital gains reports, and more. It also offers tax preparation using third-party data collection, encompassing onboarding consultations, basis analysis, and handling of staking, lending, derivatives, and margin transactions. Lastly, it shows expertise in providing full-service tax preparation with application programming interface (API) data collection.

Individuals and entities seeking the mentioned services can trust Decrypted Tax's team of highly talented tax attorneys, accountants, and enrolled agents to deliver exceptional service with a personalized touch. The members have over 20 years of collective tax experience in tax services for individuals, partnerships, corporations, and trusts. Moreover, they're actively engaged in the crypto and DeFi space and ensure to stay updated on the latest developments in the field.

The forward-thinking company also stands out for prioritizing transparency. "We give our clients accurate information, even if it's not what they want to hear. Many are burdened with having to report their transactions and determine whether they're profits or losses. We're here to guide them through the entire process so they can identify tax losses that can be harvested to offset profits," Lee explains.

In addition, while Decrypted Tax operates exclusively within the US, it has established partnerships with professionals in various jurisdictions worldwide. These international partnerships provide valuable collaboration opportunities, allowing the firm to offer clients across borders comprehensive tax solutions.

With its unique propositions, Decrypted Tax is bound for expansive growth and widespread adoption within the crypto community. It intends to remain committed to streamlining the process of reporting all digital asset transactions for its clientele while ensuring compliance with tax regulations.

Media Contact

Name: Matthew Magilligan

Email: matt.m@combat.net

There is no offer to sell, no solicitation of an offer to buy, and no recommendation of any security or any other product or service in this article. Moreover, nothing contained in this should be construed as a recommendation to buy, sell, or hold any investment or security, or to engage in any investment strategy or transaction. It is your responsibility to determine whether any investment, investment strategy, security, or related transaction is appropriate for you based on your investment objectives, financial circumstances, and risk tolerance. Consult your business advisor, attorney, or tax advisor regarding your specific business, legal, or tax situation.