During tax season there is a lot to think about. You need to gather all your documents including your employment income and any extra income you earn from rentals. You also need to gather information on your investments and whether or not you made money on them. If you have invested in cryptocurrency and then sold any in the past year, you will need to claim any gains or losses on your taxes.
It can be confusing for someone who hasn't claimed cryptocurrency on their taxes before, and this is where contacting a crypto tax lawyer can help. Here are some reasons why you should consider hiring a crypto tax lawyer when filing your taxes.
They Can Show You How To Keep Accurate Records
When you invest in cryptocurrency, it's vital that you keep thorough and accurate records. This will include the date when you purchased the currency such as Bitcoin, how much you have purchased, and the amount it cost, plus its worth at any given time.
This means, you need to record anytime you buy new crypto, and then continue to keep a record of any gains or losses it makes while you hold it. This is so you know its overall value and what tax might be owed on it when you decide to sell.
Cryptocurrency is considered a source of income just as with a more traditional investment like stocks or bonds. They are subject to both federal and state taxes and your crypto tax lawyer can help you determine what tax might be owed on the amount of crypto you own. This is why it's important to keep accurate and up-to-date records.
They Can Explain How The Federal Taxes Work
If you buy and sell cryptocurrency for profit, you will need to know how federal taxes will affect your bottom line. For business owners, you will pay tax on any cryptocurrency profit you make when you sell. This is much like the profit you would make from any traditional business venture and is treated the same way by the federal government in relation to taxes.
Federal taxes treat cryptocurrency similarly to any property you may own, as it is considered property owned by either you as an individual or by your company. A crypto tax lawyer can help you learn how the federal government will treat your crypto investments and when you may need to pay taxes on them.