With tax season looming near, we thought the following post from our friend and fintech thought leader Dara Albright, in conjunction with EisnerAmper, was most instructive. Many have invested in crypto and perhaps “forgotten” to mention those transaction on prior tax returns. NOT A GOOD IDEA, and Dara shares some surprising statistics and more importantly, pragmatic advice on how to handle crypto transactions – and why. Always a great read from this visionary.
By Dara Albright in Conjunction with EisnerAmper
“The sharp decline in cryptocurrency prices in 2018 has many pundits talking about the viability of tax loss deductions. But, neglecting to report cryptocurrency losses may be the least of the industry’s problems.
Interestingly, 2017 saw mounting cryptocurrency prices and exponential growth in blockchain wallet users. Yet, according to Credit Karma, less than 0.04% of the federal tax returns prepared and filed by its customers last year reported any cryptocurrency gains and losses.
One year later, aside from cryptocurrency prices, not much has changed. According to Credit Karma, most Americans aren’t planning to report their cryptocurrency transactions on their 2018 returns either – despite many being eligible for significant tax deductions. Credit Karma estimates that Americans lost $1.7 billion and had unrealized losses of more than $5 billion in the 2018 crypto bear market.
So, what is preventing U.S. crypto investors from claiming the tax deduction that they’re entitled to receive? The answer is as unfortunate as it is preventable, and it can be summed up in one word: “uninformed.”…