Crypto is getting bigger and bigger.
As of 2022 BitCoin along with several other cryptocurrencies holds a 1.02 trillion market cap and is actively traded, exchanged, or sold for goods and services. Transactions are stored in what is called a BlockChain.
There are several types of BlockChains. Transactions on the block chain are cryptographically sealed creating a tamper proof record stored in blocks.
There is mining (proof of work), staking (proof of stake) and masternoding ( proof of service). This is all highly complex so if you are going to do this find a reputable exchange who can help you out. This may not be a good do it yourself project, however having a good reputable exchange can make a difference.
Where we come in is the taxation of cryptocurrency.
Make sure your brokerage firm gives you a clear concise report annually that shows your gains or losses so your CPA can include it on your tax return. Don’t just not report it. The IRS will likely send you a letter.
If your yearly statement shows considerable losses, you may want to reconsider what you are doing. Why do it to lose money? So, when you have your taxes prepared take a few minutes and sit down with your CPA and get their advice. It will be worth the time invested.
In general, it seems the younger ones have a better grasp of this concept than the older ones but not always.
What’s the moral of all this? If you do crypto overreact. Obtain some professional help. Don’t handle it yourself! Call Philip Garnett Tax Resolution to get some experience help here!