The Big Four accounting firm Ernst & Young introduces a cryptocurrency tax tool to streamline bitcoin taxing in time for the 2019 U.S. tax season.
Ernst & Young said it designed its EY Crypto-Asset Accounting and Tax (CAAT) program specifically for its clients who invest in cryptocurrencies. The tool is just in time when Americans begrudgingly prepare to file their tax returns. The accounting juggernaut said the U.S. rollout of the software is part of its strategy to become a leader in blockchain services.
“EY CAAT has the ability to source transaction-level information from virtually all major exchanges. It consolidates data from multiple sources and allows for the automated production of various reports and dashboards, and preparation of IRS tax returns related to crypto-assets.”
COINBASE’S PARTNERSHIP WITH TURBOTAX
Intuit has teamed up with cryptocurrency exchange Coinbase in January and EY is following in their footsteps. Under that partnership, Coinbase customers can import all their Coinbase transactions directly onto Intuit’s TurboTax tax-preparation software.
The IRS released its initial guidance on cryptocurrency taxes in 2014 when the bitcoin price never topped $640. By 2017, the bitcoin price rocketed to a record high approaching $20,000.
The industry’s meteoric growth caused mass confusion among bitcoin investors, many of whom claimed they didn’t know they were required to pay taxes on their capital gains.
LAWMAKERS URGE IRS TO CLARIFY TAX GUIDELINES
In September 2018, a group of U.S. lawmakers asked the Internal Revenue Service to provide updated guidelines on how taxpayers should report profits from their crypto investments. In a strongly-worded letter, the lawmakers rebuked the IRS for not providing more clarity even as it aggressively pursued alleged tax evaders.
WHAT IS TAXED?
Not every crypto transaction is taxed. According to TurboTax, you are required to report cryptocurrency as income if you did the following:
1. Sold bitcoin (or any other crypto).
2. Converted bitcoin to fiat currency.
3. Used cryptocurrencies to pay for goods or services.
4. Received free crypto through a fork or an airdrop.
Your transactions are not taxed if you:
1. Bought bitcoin but never sold it.
2. Gave crypto as a gift to a friend or family member, and the gift was less than $15,000.
3. Purchased crypto with a Self-Directed IRA or Solo 401(k).
Will the taxation tool gain mass adoption soon? Drop a comment and let us know.