From staking tokens to minting NFTs to arbitrage trading, there is no shortage of transaction types when it comes to cryptocurrency. What’s potentially even more confusing is that each cryptocurrency transaction comes with its own set of tax implications. That is why most cryptocurrency users elect to hire a cryptocurrency CPA to assist in filing their returns each year, but selecting the right one can be challenging.

Talk to Your Cryptocurrency CPA About How the IRS Treats Cryptocurrency

When selecting a cryptocurrency CPA, it’s important to ensure they are staying up to date with current laws and regulations. One way to judge a prospective CPA’s cryptocurrency knowledge is to ask them how the IRS treats cryptocurrency. For example, a CPA who specializes in cryptocurrency should know that the IRS treats crypto as property and not as a currency.

Additionally, the prospective CPA should know how and when cryptocurrency is taxed at different rates. For example, cryptocurrency purchased and sold inside of a one-year time frame are short-term capital gains and are subject to ordinary income tax rates. On the flip side, cryptocurrency purchased and subsequently sold more than a year later is subject to long-term capital gains tax, a rate which is typically favorable to ordinary income tax rates.

Check Their Understanding of Crypto and NFT Transactions

Once you’ve vetted a cryptocurrency CPA and are satisfied with their base level of understanding, you’ll want to inquire about their knowledge around more complex cryptocurrency transactions and how they are taxed.

A great way to test a cryptocurrency CPA’s knowledge is asking them about similar types of transactions that have different taxability. Airdrops, for example, are taxable as income to the person who receives it. Credit card rewards paid in cryptocurrency and airdropped to your wallet are not taxable. Examples of other transactions to speak to your prospective CPA include staking, lending, and minting.

Ask About the Software

The final criteria to evaluate prior to selecting a cryptocurrency CPA is to receive some information about the software they use to assist in your filing.

There are a couple of features and capabilities you’ll want to see offered. Ideally the cryptocurrency software not only assists the CPA in calculating your taxable income, it should also include a dashboard providing real time updates and insights into your cryptocurrency portfolio. Additionally you’ll want to ask the CPA if the software is able to handle different types of cost basis and has the ability to assist in transactions and gain reconciliations.

Get Your Crypto Taxes Done Today With an Experienced Founders’ CPA

Our team of seasoned cryptocurrency CPAs is ready to assist you with your cryptocurrency taxes. Our deep industry knowledge and experience paired with our preferred cryptocurrency software, CoinTracking.Info which provides dashboarding, transaction validation, and tax reporting functionality allow us to offer best in class service.

If you have additional questions or are looking to get started with your cryptocurrency taxes today, don’t hesitate to reach out to our team at Founder’s CPA for guidance!

Curt Mastio
Post by Curt Mastio
Aug 20, 2024 12:57:54 PM
Curt Mastio started Founder’s CPA in 2017 and currently serves as the Managing Partner of the firm. After obtaining both his Bachelor’s and Master’s degrees in accounting from the University of Illinois in Urbana-Champaign Curt started his career in Big Four public accounting. Shortly thereafter Curt served as the Chief Financial Officer of Storage Squad began his stint as an Adjunct Instructor at Northwestern University’s Farley Center for Entrepreneurship and has been teaching Accounting & Finance to undergraduate students for 6+ years. In his current role Curt oversees strategy, operations, and business development at Founder’s CPA. Further, Curt has experience working directly with 200+ startups and small businesses providing accounting, tax, and outsourced CFO services. His industry expertise lies in the SaaS, Blockchain, Marketplace, and Fintech industries. He has served as a key advisor working directly with startups that range from pre-revenue to companies generating over $30 million dollars a year in revenue. Lastly, he serves a key role working directly with the firm’s clients that have collectively raised over $200 million in venture capital funding to date. Curt is also an active advisor, mentor, and investor in the startup ecosystem. He has facilitated numerous workshops, webinars, and presentations to incubators and other startup-centric organizations. He is also an active mentor for Techstars in both Chicago and Iowa. Outside of his daily professional duties Curt is actively involved with Beat the Streets Chicago and was a founding member of its Young Professionals Board. His efforts in both leadership and community involvement were recognized when he was awarded the Illinois CPA Society’s Outstanding Young Professional Leadership Award in 2020. He was also a panelist at their annual conference in 2022 where he spoke about his experiences starting and operating a public accounting firm. He maintains an active Certified Public Accountant designation that he obtained in 2014. Outside of work, Curt can be found spending time with his friends & family including his dog Rufus. His hobbies include golf, boating, cooking, reading, and attending sporting events & concerts.