How to Find a Crypto Tax Accountant
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A crypto tax accountant stays current with the latest trends and tax consequences around crypto and ensures their clients properly file their taxes and maximize their returns in this exciting new asset class.
A crypto tax specialist will be comfortable discussing a plethora of topics around the tax consequences of various crypto activities, including short- and long-term trades, as well as staking and mining.
Do you need an accountant for crypto?
The tax status of cryptocurrency remains murky. However, the IRS has begun to clamp down and distribute detailed guidelines for how digital currencies are taxed — specifically how gains/losses, cost basis, and tax deductions from losses are to be recorded now and in the future.
Surging interest in cryptocurrency has given rise to a critical need to hire a crypto tax accountant and Certified Public Accountants (CPAs) with a deep understanding of this rapidly evolving field.
Alongside their capital gains, many crypto traders will need help accounting for crypto mining and staking as well. They may also need help understanding the difference between taxable events that will affect their tax liability and non-taxable events that need to be recorded for crypto tax calculations.
Is hiring a crypto tax accountant worth it?
A crypto tax accountant is a valuable ally for crypto users, providing essential guidance on navigating the intricate and often complex landscape of cryptocurrency taxation. Their expertise empowers you to make informed decisions about how to manage your crypto gains and losses before and through tax season.
While the cryptocurrency community scrambles to understand what the tax law expects of them, normal accounting firms will be familiar with the basics of cryptocurrency tax preparation, such as filing a Form 8949. However, these accountants may not have a grasp of the nuances of tax reporting that crypto tax accounting demands.
Why you should hire a crypto tax accountant
Crypto moves fast, and so do crypto tax regulations. As crypto adoption has increased, so has the demand for crypto accountants who specialize in crypto and truly understand the rapidly evolving space.
A crypto tax accountant stays current with all the latest trends and tax consequences around crypto and works to ensure their clients properly file their taxes and maximize their crypto returns. Given the complex nature of crypto taxes and increased IRS scrutiny, hiring a professional crypto tax accountant is increasingly necessary for those engaged in crypto.
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What does your crypto tax accountant need to file your taxes
A crypto tax accountant will need a complete record of your crypto activity. Fortunately, crypto records are easily accessible, whether you trade on a centralized exchange or use DeFi.
Depending on how complex your crypto activity is, you may need to provide further details about staking or mining and other professional crypto activity. Crypto holders should maintain thorough records of transactions, gains and losses, and expenses related to crypto if they trade professionally or engage in other crypto activities as a professional or business.
Costs for a professional crypto CPA
The hourly rate for a professional crypto accountant will vary, and how much you can expect to pay will depend on the complexity of your crypto transactions. A CPA will charge between $37 to $400 an hour, and many will not be qualified as crypto tax accountants.
Given the complexity and shifting regulations around crypto taxes, it’s important to work with a true crypto tax accountant who understands the ins and outs of the industry.
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Questions to ask before hiring a crypto tax accountant
To ensure the crypto tax accounting firm you hire is qualified, consider asking some of the questions below before hiring them. A qualified crypto accountant should be comfortable discussing these topics:
How familiar are you with cryptocurrency?
What does your process look like and how long will it take?
Can you calculate my data from multiple exchanges?
Do you know the definitions of staking and mining and how they affect my taxes differently?
Have you filed a crypto FBAR before?
Do I need to give you my data for past years?
I don’t have all of my trade data. What can I do to still file accurately and on time?
Crypto tax accountant FAQs
Here are answers to frequently asked questions and how a crypto tax accountant can help.
Will the IRS audit you for crypto?
While the likelihood of an IRS audit for crypto activities is generally low, an audit can happen to anyone. Between 2010 and 2018, the IRS audited approximately 0.6% of personal and 0.97% of corporate returns. Engaging a crypto tax accountant is strongly advised despite these relatively low audit rates. Collaborating with a professional ensures accurate and proper filing of your returns, offering additional protection and expertise in navigating the complexities of crypto taxation.
How to pay less taxes on crypto
There are a number of legal ways to reduce your crypto taxes. For US traders, holding for long-term capital gains is an obvious choice. You may also consider donating some of your crypto or a tax loss harvesting strategy. This is another area where a crypto accountant will be able to advise and assist.
Do I need to give my crypto tax accountant data for past years?
Yes, providing historical data is essential for a thorough crypto tax assessment. Having a complete record of your past years' crypto activities allows a crypto tax accountant to calculate your tax liability and ensure compliance with tax regulations.
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