As a provider of the CCH Axcess Marketplace, Ledgible provides Ledgible Crypto Tax Pro software, a professional crypto tax platform that integrates with CCH Axcess Tax. CCH Axcess Tax clients can easily import profit/loss information from Ledgible to facilitate crypto tax filing.

Cryptocurrencies are quickly becoming a more widespread form of payment and investment, and as such, it is important to have a good understanding of how cryptocurrency tax planning works. It is also essential to understand the key questions to ask clients when having a conversation about cryptocurrency tax planning.

In this blog post, we’ll cover the basics of what crypto tax planning is, why tax professionals and accountants should care about it, and provide some tips on how to talk to clients about their cryptocurrency activities.

What is crypto tax planning?

Crypto tax planning is the process of ensuring that any investment or trade made in cryptocurrency is correctly reported for tax and that applicable taxes are paid in full. It is important to note that while there are many similarities between traditional investments and cryptocurrency investments from a tax standpoint, there are also some clear differences.

Therefore, it is important to understand the similarities and differences before engaging in crypto tax planning conversations with clients.

Why Accountants and Tax Professionals Should Care About Crypto Tax Planning

From an accounting perspective, it is essential to stay on top of the ever-changing regulations surrounding cryptocurrency transactions. As cryptocurrencies are increasingly used for investing and trading, the IRS has begun cracking down on those who do not correctly report income from these transactions.

Additionally, if someone fails to accurately report their income from cryptocurrency transactions, they could face serious penalties from the IRS. As a result, it is important that any accountant handling a client’s finances is knowledgeable about all aspects of crypto tax to ensure that clients comply with all applicable laws and regulations.

Key questions to ask your clients in a tax planning conversation

When talking to a client about their crypto tax planning needs, there are several key questions to keep in mind during the conversation:

  • Do you have any crypto?
  • Did you include cryptocurrency in returns from previous years?
  • How active have you been with crypto this fiscal year?

Asking these questions during your initial consultation provides a more accurate picture of your current situation. Armed with this information, it is easier to develop an effective strategy on how to handle issues like crypto-related capital gains when filing tax returns. Plus, asking these questions early helps avoid costly mistakes later.

Ledgible Tax Pro makes tax preparation easier than ever. Inviting customers to connect with Exchanges and Wallets makes the process of collecting information and analyzing it for taxable transactions quick and simple. This organized data is even sorted by cryptocurrency, so there’s no need to worry about spending hours poring over a variety of figures. Working with Ledgible Tax Pro means no more stress during cryptocurrency tax season!

Tips for Talking Cryptocurrency with Your Clients

Consider the crypto activity of the previous year. When discussing cryptocurrency with clients, it’s important to consider not only their activity for this year, but also activity from previous years. This will help ensure that all filing requirements have been met correctly in both years to avoid penalties or interest charges due to non-compliance.

Discuss reporting requirements. Make sure clients understand the reporting requirements associated with each cryptocurrency they own or trade so they can accurately disclose all taxable events related to those currencies on their returns.

Review the tax implications. Explain the different tax implications associated with short-term and long-term cryptocurrency capital gains and/or losses caused by trading activities so they can make informed decisions regarding their overall financial strategy moving forward.

Develop a tax planning manual. The importance of developing an effective tax planning playbook cannot be overstated; Proper preparation will help ensure that everyone continues to comply with all applicable laws while minimizing potential liabilities associated with misreporting taxable events related to cryptocurrency transactions or investments.

Being proactive in understanding the best way to manage client cryptocurrency will benefit everyone involved in the process going forward. Following the advice outlined above helps ensure that both the accountant and the client’s finances remain safe from potential penalties or other legal issues associated with misreporting crypto activities on tax.