Lost in the wide world of crypto tax? Crypto is taxed around the world but navigating the rules is not always easy. Especially when things get tricky, leaving many investors wondering whether they should DIY-it or bring out the big guns in the form of a crypto accountant. If you're asking yourself, "do I need a crypto accountant?", we've got the answers.
When do you need an accountant for crypto?
- You invest in DeFi. Most tax offices around the world haven't released dedicated guidance on DeFi transactions yet - and even where tax offices like the UK's HMRC has, the guidance itself is still difficult to navigate for most. As such, you'll normally be left trying to interpret the current existing guidance from your tax office and apply it to your crypto. But there's some huge pitfalls to this. File wrong and your tax office can come after you for taxes due, even if you've acted in good faith. An experienced crypto accountant can help you navigate your investments and your tax liability accurately and ensure you report correctly to your tax office.
- You've used a collapsed exchange. Celsius, FTX, Voyager and more... a lot of big players in crypto went out of the game in 2022, leaving millions of investors with funds stuck on exchanges they cannot access and losses they cannot realize. Navigating the accounting and tax implications of these kind of events is difficult as it all depends on where you live, where the company is filing for bankruptcy, how likely you are to see your funds back in the future. An experienced crypto accountant can help you navigate what you need to declare to your tax office and when.
- You've had crypto stolen. Hack, rug pull or otherwise - crypto losses due to theft hit $3 billion in 2022, breaking all previous records. Many tax offices let you claim capital losses as a result of theft - but you'll need a lot of proof and to follow the correct process to claim a capital loss, which can be both time consuming and a overly bureaucratic. A crypto accountant can do this on your behalf, making sure you recoup as much as you can from crypto losses.
- You're being audited. Many tax offices including the IRS and the ATO have outright stated crypto is going to be a key focus - you can read more about crypto audits here. But as such, you can expect audits to increase substantially for crypto investors. If you're being audited, the best course of action to ensure you comply fully with your tax office and accurately report any previously undeclared gains or income from crypto with minimal penalties is to seek the help of an experienced crypto accountant.
- You want to pay the least tax possible - legally. Navigating the various tax breaks and reliefs available to you in your country is difficult. There aren't any crypto specific tax breaks available in most countries, but there are plenty of general tax reliefs available that may help you reduce your overall tax bill. An experienced accountant can help you apply the best tax reliefs to ensure you pay the lowest amount of tax possible - legally.
When tax filing can already cost a chunk of change, it can be tempting to cut corners by filing your tax yourself. Especially when there's great tax calculators out there (like Koinly!) to help you calculate your tax liability and generate your crypto tax reports. For most crypto investors, the use of a good cryptocurrency tax tool is all they need. But if you find yourself in more complex waters, a crypto tax accountant is worth looking into.
Where can I find a trusted crypto accountant?
We're all about making your crypto taxes as easy as possible - which is why Koinly has a dedicated directory of crypto accountants from around the world to pick from. Just head over to our directory of crypto accountants and find the right one for you.
Does your accountant need to be a crypto tax expert?
It really depends on your crypto trading activity. If you've made massive gains, crossed the invisible line between investor and trader, been called up for an audit (yikes!), or invested in more of the cryptic cryptocurrency projects, then yes. The more complex your story, the more you'll need a crypto accountant, or crypto CPA even. As with anything, when the financial - and legal - stakes are high, it's time to call in the experts.
If however, your investing and trading activity is more low key - even if still at high volume - the combination of a good accountant and crypto tax software will get the job done.
Full service crypto accounting
Whether you're in need of a crypto tax expert, or just a good accountant with the tools of the trade, you may want to hire a tax accountant to handle it all for you. From working out your crypto tax liability to filing your final income tax return.
Your accountant may do the sums via statements, spreadsheets, and transaction reports that you supply them, or they make make use of a crypto tax calculator themselves. Koinly is a good tool for this in the sense that crypto investors can set up their profile - with all their crypto trades imported into a single dashboard - and invite their accountant to view their data with from an email invite.
Expert review and crypto tax filing
There is also the chance that you need a crypto tax expert for only part of the job. Whether you've spent the hours upon hours to work out your crypto taxes, or skipped ahead with crypto tax software, you may want to share your final calculations with your accountant to sense check the numbers, and file on your behalf. Again, using a tool like Koinly can help you and your accountant get your taxes done faster, together.
Share your Koinly report
Any time you're thinking about crypto taxes, remember that you need to keep a record of all your crypto transactions, including when and for how much you bought and sold each asset, and what their dollar worth was at the time. For crypto investors who trade at volume, this in itself is a lot of work. Let alone then identifying and calculating the different types of taxes for each transaction.
This is why using crypto tax software like Koinly is a much easier option when it comes to crypto taxes. Create an account and simply connect all your crypto exchanges and wallets to Koinly. Koinly does the maths and conversions and works out exactly what you've made in terms of short and long term gains, as well as income from crypto. Koinly then offers several reports that provide various levels of information, tailored to different countries.
If you're a crypto traders who wants to DIY a healthy chunk of the job, you can get to the report stage using Koinly and then share their report with your accountant. It will make their job a whole lot easier - even if they don't have years of crypto tax experience to back them up.
Invite your accountant to your Koinly account
Any time you can lessen the admin burden for yourself, and your accountant, you're saving time and money.
Koinly offers a really cool feature that connects your accountant to your crypto tax report directly - without having to download it, email it or explain it. All you'd have to do is invite your accountant to view your dashboard, via a share link. Once they're in, they can then do a thorough check of your numbers, and potentially advise you on some tax-saving measures, like selling off badly performing crypto to offset a large capital gain.
If there's ever been a benefit to connecting your accountant to your complete crypto portfolio, it's to give them time to find ways to reduce your tax bill.
You can get some ideas on what to ask them here, in our guide on how to pay less tax on crypto - legally.