CryptoTaxPrep.com Presents: How to Keep Your Records of your Cryptocurrency Investments Ready


– [Narrator] Keeping records
of your cryptocurrency investments ready for tax season. All too often, tax season
sends us scrambling through old filing
cabinets and desk drawers, desperately looking for
proof of our deductions. However, some of us have come to rely almost entirely on electronic copies of our financial records. Often, these records are held
on some sort of cloud-based data storage system. This is particularly true in
the entirely digital world of cryptocurrency investment. More and more people are investing in cryptocurrencies every day. As a result, an increasing
number of Bitcoin users will be responsible for reporting their cryptocurrency assets
on their tax returns. However, knowing what paperwork and forms you’ll need to submit a
complete and accurate return is a daunting tax. The professionals at Happy Tax are experts in both tax preparation and
cryptocurrency tax rules. All returns are reviewed by
certified public accountants, CPAs, so you can rest assured
that your tax documents are in line before you submit your return to the Internal Revenue Service, IRS. What happens if I don’t
have accurate records? Okay, lots of us don’t do a great job keeping receipts. One famous big spender,
Broadway pioneer George Cohen, defined the boundaries of IRS
recordkeeping requirements. Cohen famously spent
lavishly and always in cash. When the IRS demanded receipts to support his business expense deductions, Cohen was unable to produce them. Rather than paying his tax bill, the showman sued the agency and won an important legal victory. The Cohen Rule, as it’s now known, allows taxpayers to prove records by actual paper receipts
or other credible evidence. However, the Cohen Rule is far from a get out of jail free card when it comes to incomplete tax records. The IRS will not accept returns without any substantiation. Rather, Cohen established
that forms of proof other than paper records, such as oral or written statements, can be used if actual
documentation is not available. Potential pitfalls of
electronic recordkeeping. Most of us keep our bitcoins
or other virtual currencies on an exchange, like Coinbase. But what happens if the exchange suddenly goes out of business or disappears? In that case you may not be able to access the records you need for your taxes. Responsible recordkeeping is critical when it comes to reporting
your cryptocurrency income, particularly as the IRS
is ramping up enforcement against many Bitcoin users. As a result, cryptocurrency users should keep backup copies of all of their digital transactions. Hiring a professional
to help you with this is a good idea, as having an accountant keep all of your records can give you peace of mind during an
otherwise stressful tax season. Tax professionals ensure
your records are in order. Like many other tax rules
regarding cryptocurrency, it’s unclear whether the IRS will apply different recordkeeping
standards to virtual currency. However, good recordkeeping is critical to avoid potential
liability while the agency is sorting out cryptocurrency tax policy. The CPAs at Happy Tax
are specially trained to handle cryptocurrency
on your tax return, and they can advise
you on what you’ll need to document your claims. With the help of the skilled
professionals at Happy Tax, you won’t have to worry
about what you’ll need come tax time.

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