In today’s crypto assistant, Bryan Courchesne from sheet Provides information about tax plans for crypto transactions. Although we are half a year away from the tax season, there are still many considerations to follow in order to prepare for tax payment.
Then, Saim Akif from Akif CPA Break the difference in tax handling between cryptocurrencies and stocks/bonds in inquiry experts.
Crypto Tax is complicated, don’t derail your portfolio
As advisors focusing on cryptocurrencies, we are familiar with the unique taxation of gifts in this asset class. For example, cryptocurrencies do not comply with clean sales rules, which allows for more effective tax cuts. It can also directly swap asset, such as converting Bitcoin (BTC) to Ether (ETH) or ETH to SOLANA (SOL) without having to sell cash first. These are just a few features that make cryptocurrencies different from traditional investments.
But what matters most to investors is the large number of platforms they may use, and the challenge of tracking everything while paying taxes.
Tracking crypto taxes is more than just a year-end trivia; it’s a year-round challenge, especially if you’re active on multiple centralized exchanges (CEXS) or decentralized platforms (DEX). Every transaction, swap, airdrop, deposit reward or bridge event can be a taxable activity.
Centralized trading
When using CEXS like Coinbase, Binance, or Kraken, you may receive year-end tax summary, but these platforms are usually incomplete or inconsistent. A major challenge is tracking your cost base in communication.
For example, if you buy Amazon stock in your Fidelity account and transfer it to Schwab, your cost base will be seamlessly transferred and updated with each new transaction. When paying taxes, Schwab can generate accurate 1099, showing your losses and losses.
But in cryptocurrencies, if you transfer assets from Kraken to Coinbase, your cost base is not automatically transferred. If you are moving assets across multiple platforms, you will need to track each transaction manually or face a major headache when submitting your taxes.
Decentralized transactions
Things get more complicated when using DEX. Applications like Coinbase Wallet (not to be confused with Coinbase Exchange) or Phantom connect you to a decentralized trading platform such as UnisWap or Jupiter. These DEXs do not issue taxes or track your cost base, so they are entirely logged in and reconciled by each transaction.
Missing a single token exchange or forgetting to record the fair market value of withdrawing liquidity pools, your tax report may be inaccurate. This may trigger review by the IRS or lead to loss deductions. Although some applications can calculate gains and losses from a single wallet address, they often struggle when the assets are transferred between addresses, making them less useful to active users.
Here is the kicker: If you actively trade DEX, you may not even make money. However, even losses must be reported correctly to obtain deductions. If not, you may lose logout, or worse, face audit.
Unless you are a full-time crypto trader, the time and effort required to track each transaction is not only stressful, but it also costs you real money.
What steps can I take to make sure I’m ready for taxes?
However, there are several ways to properly prepare crypto taxes:
- Use crypto tax software from the beginning. Even then, you still need to double-check that the reported activity makes sense and adjust as needed.
- Hire crypto tax experts or work with crypto-centric consultants who understand the landscape.
- Download all transaction logs to see if your CPA or advisor can help build a cost base and determine the benefits and losses you have realized.
As adoption increases, tax reports will undoubtedly develop – while tracking your trade activities is important to prepare for the tax season.
Ask an expert
Q: Why do consultants keep an eye on cryptocurrencies?
one.Institutional crypto inflows have soared to $35 billion. While cryptocurrencies are more volatile than traditional assets, major cryptocurrencies like Bitcoin have Historically, the performance of other traditional asset courses Since 2012.
Q: How are cryptocurrencies different from taxes dealing with stocks/bonds?
A. Crypto is fundamentally different from stocks and bonds. The consultant must track each wallet individually for a cost basis (starting from January 2025). Unlike the traditional 1099s, clients often received little reporting on communication, especially for self-sustaining assets.
Q: Do you have any special insights about CPA and tax consultants?
A: Compliance is no longer optional. Start with 2025 returns:
- Wallet-level cost base reporting is mandatory.
- IRS Form 1099-DA will begin to appear in 2026.
- Exchanges generally do not support reporting of self-sustaining assets.
Smart tax professionals combine tax reporting, audit defense and violation accounting into advanced consulting services.
– Saim Akif, Founder, Akif CPA
Continue reading
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