If 2021 was the year that crypto went 'retail', then 2022 will be the year that crypto's tax implications are fully understood. That's because tax offices throughout the world are clarifying their rules and regulations while hunting down unpaid crypto taxes by any means possible. For investors, the message is clear, you have to pay tax on crypto.
But calculating those taxes is no walk in the park - and neither is finding an accountant with crypto experience. In this guide, we'll look how the use of a crypto tax calculator can save hours of time for both you and your accountant - whether they're a crypto expert or not.
When do you need an accountant for crypto tax?
In truth, you may very well not need an accountant or CPA to do your crypto taxes, thanks to online crypto tax software that does the calcs and conversions for you. But there are situations where the assistance of an accountant is needed.
Perhaps it's your first time filing anything more complicated than an annual income tax return. Or perhaps you're looking for strategic guidance on how to reduce your crypto taxes. Having an accountant or tax advisor in your corner is a smart move, and one that doesn't need to cost you an arm and a leg, or take you on an arduous quest to find a crypto tax guru.
Koinly works with crypto tax experts around the world. Browse our directory of crypto accountants here.
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.