Crypto Tax Reporting (Made Easy!) - CryptoTrader.tax / CoinLedger.io - Full Review!

Summary

In this video, CryptoCasey delves into the complexities of cryptocurrency tax reporting, emphasizing the crucial importance of declaring all crypto-related activities such as buying, selling, trading, and staking, along with NFT transactions. Highlighting the heightened scrutiny by the IRS, she shares personal experiences with tax challenges and underscores the potential legal consequences of non-compliance. To alleviate the daunting task of tax reporting, CryptoCasey introduces cryptotrader.tax (soon to be Coin Ledger), a user-friendly platform that simplifies the process by automating tax report generation. She walks viewers through the platform's features, benefits, and how it integrates with traditional tax filing systems, making it an essential tool for crypto investors seeking to ensure compliance and avoid penalties.

Takeaways

• 🖥 Last year was particularly challenging for crypto investors in terms of tax reporting, and the situation is expected to become more complex.
• 📌 It's crucial to report all cryptocurrency investment activities, including transactions such as buying, selling, trading, staking cryptocurrencies, and dealing with NFTs.
• 💻 Cryptotrader.tax (soon rebranding to Coin Ledger) is highlighted as a simple and cost-effective service for easing the crypto tax reporting process.
• 📲 The importance of using a VPN like NordVPN for additional protection of investments, data, and privacy in the crypto space is emphasized.
• 🛡️ The IRS views cryptocurrencies as property for tax purposes, requiring reporting of gains and compliance with tax obligations.
• 🧹 Non-compliance with crypto tax reporting can lead to interest penalties, criminal charges, and substantial financial consequences.
• 💰 Taxable events in crypto include selling or exchanging cryptocurrency, receiving crypto as payment, mining, staking rewards, and NFT sales.
• 💾 Transactions on the blockchain make financial auditing simpler, underscoring the importance of not evading tax obligations.
• 🔧 iTrust Capital is recommended for legally tax-free or tax-deferred crypto trading within retirement accounts.
• 📈 Cryptotrader.tax offers a user-friendly platform for importing transactions, classifying crypto income, and generating tax reports without upfront payment.

Q & A

What is the main topic discussed in the video?

The video discusses the importance of reporting cryptocurrency investment activities for tax purposes and introduces a service that simplifies the crypto tax reporting process.

Why was last year described as tough for crypto investors in terms of taxes?

Last year was tough for crypto investors in terms of taxes due to increased scrutiny and regulatory moves by the IRS and Congress to improve taxpayer compliance with cryptocurrency transactions.

What types of cryptocurrency investment activities are mentioned as needing to be reported?

The activities mentioned include buying, selling, trading, and staking cryptocurrencies, as well as dealing with NFTs.

What service is recommended for easing the crypto tax reporting process?

Cryptotrader.tax, which is rebranding to Coin Ledger, is recommended as a simple and cost-effective service for easing the crypto tax reporting process.

What consequences does the video mention for not reporting crypto transactions to the IRS?

Consequences include interest penalties, criminal charges, and the IRS potentially auditing individuals who fail to report their crypto transactions.

How does the IRS view cryptocurrencies for tax purposes, according to the video?

The IRS views cryptocurrencies as property for U.S. federal income tax purposes, requiring individuals to report gains realized on the sale of cryptocurrency and pay taxes on these gains.

What kind of support does Cryptotrader.tax offer its users?

Cryptotrader.tax offers a responsive and helpful support team that works real-time to answer crypto tax questions and assist users in navigating the platform.

What are the steps outlined in the video for generating a tax report using Cryptotrader.tax?

The steps include importing crypto trades, classifying crypto income, reviewing data and generating the report, and finally, filing your crypto taxes.

What does the video say about the future of staking and DeFi activities in retirement accounts?

The video mentions that I Trust Capital will soon support staking and other DeFi activities in cryptocurrency retirement accounts, potentially offering tax-free or tax-deferred growth.

How are NFTs treated for tax purposes, according to the video?

NFTs (Non-Fungible Tokens) are treated the same as any other real-world investment for tax purposes, meaning gains from trading NFTs are taxable.

Outlines

00:00

📈 Navigating Crypto Taxes and Security

This segment emphasizes the complexities and necessities of reporting cryptocurrency transactions for tax purposes, especially following a challenging year for crypto investors. Cryptocasey, the presenter, stresses the importance of accurately reporting all crypto-related activities including trades, staking, and NFT dealings. The video also highlights the utility of VPNs, particularly NordVPN, for enhancing online security and privacy for crypto investors. The narrative warns about rampant scamming in the crypto space and the necessity of adhering to official communication channels to avoid fraud. It concludes with a reminder of the IRS's stringent stance on cryptocurrency taxation, underscoring the legal requirement to report all crypto transactions to avoid penalties, interest, or criminal charges.

05:02

🚨 The IRS and Crypto Compliance

The script delves into the potential consequences of non-compliance with IRS regulations on crypto transactions. It underlines the immutable nature of blockchain, which makes financial auditing straightforward for the IRS, hence increasing the likelihood of catching non-compliant investors. It also offers insights into legal, tax-free crypto trading using retirement accounts, highlighting iTrust Capital for its low fees and upcoming features supporting DeFi activities. The narrative encourages viewers to report all crypto activities to maintain financial and physical freedom and avoid punitive IRS actions. Additionally, it introduces Cryptotrader.tax (soon to be Coin Ledger), a tool aimed at simplifying the crypto tax reporting process, and details its user-friendly interface, cost-effectiveness, and support system.

10:02

📊 Simplifying Crypto Tax Reporting

This segment provides a detailed walkthrough of using Cryptotrader.tax to manage and report crypto taxes efficiently. It covers the step-by-step process from signing up and importing transaction histories from various crypto platforms to classifying different types of crypto income and generating tax reports. The platform automates cost basis and fair market value calculations, simplifies classification of crypto income, and aids in identifying and correcting missing cost basis issues. The script underscores the importance of accurate reporting to avoid issues with the IRS and concludes by reviewing the different service plans offered by Cryptotrader.tax, reinforcing the tool's value in streamlining the crypto tax reporting process.

Keywords

💡Cryptocurrency Tax Reporting

Cryptocurrency tax reporting refers to the legal obligation of individuals and entities to report their transactions involving cryptocurrencies to tax authorities, such as the IRS in the United States. This includes buying, selling, trading, staking cryptocurrencies, and dealing with NFTs (Non-Fungible Tokens). The video emphasizes the importance of reporting all cryptocurrency investment activities to comply with tax laws and avoid penalties. It underscores the complexity and potential difficulty of this process due to the digital and decentralized nature of cryptocurrencies, highlighting the need for efficient tools and services to assist in this task.

💡IRS

The Internal Revenue Service (IRS) is the U.S. federal agency responsible for collecting taxes and enforcing tax laws. In the context of the video, the IRS has taken steps to improve taxpayer compliance with cryptocurrency transactions, requiring individuals to report gains realized on the sale of cryptocurrencies. The video mentions the IRS's increasing efforts to enforce tax rules on cryptocurrency transactions, indicating the risks of penalties, interest, or criminal charges for non-compliance.

💡Capital Gains Taxes

Capital gains taxes are taxes on the profit earned from the sale of an asset, which includes cryptocurrencies. The video distinguishes between short-term capital gains (for assets held for less than 12 months, taxed at regular income tax rates) and long-term capital gains (for assets held for more than 12 months, generally taxed at a lower rate). The script explains how selling or exchanging cryptocurrencies triggers these taxes, emphasizing the need for accurate reporting to the IRS.

💡Crypto Investment Activities

Crypto investment activities encompass buying, selling, trading, staking cryptocurrencies, dealing with NFTs, and engaging in DeFi (Decentralized Finance) protocols. The video emphasizes the importance of reporting these activities for tax purposes, highlighting the complexity due to the variety of transactions and their tax implications. Examples include receiving crypto as payment, mining, and earning interest from lending, all of which are taxable events.

💡NFTs (Non-Fungible Tokens)

NFTs are unique digital assets that represent ownership or proof of authenticity of items such as art, collectibles, and digital goods, using blockchain technology. The video explains that the IRS treats the sale of NFTs like any other investment, subject to capital gains taxes. This illustrates the expanding scope of taxable cryptocurrency transactions, extending beyond traditional cryptocurrencies to include digital collectibles and art.

💡Crypto Tax Software

Crypto tax software, such as CryptoTrader.Tax (rebranding to Coin Ledger), is designed to simplify the process of calculating and reporting taxes on cryptocurrency transactions. The video highlights the benefits of using such software, including ease of use, efficiency, and the ability to handle complex transaction histories across multiple exchanges and wallets. It details the software's features, like importing transaction data, classifying income, and generating tax reports, emphasizing its role in making tax reporting more manageable for crypto investors.

💡VPN (Virtual Private Network)

A VPN is a service that creates a secure, encrypted connection over the internet to protect users' data and privacy. In the video, the mention of NordVPN emphasizes the importance of using a VPN as a crypto investor to safeguard investments, data, and privacy. This recommendation reflects the broader context of cybersecurity in the digital finance space, where protecting sensitive information is crucial.

💡Tax Compliance

Tax compliance involves adhering to tax laws and regulations, including accurately reporting income, transactions, and paying taxes owed. The video discusses the IRS's efforts to ensure compliance in the cryptocurrency space, stressing the consequences of non-compliance, such as penalties and criminal charges. It advocates for the responsible reporting of cryptocurrency transactions as a means to maintain financial and physical freedom.

💡Cryptocurrency Retirement Accounts

Cryptocurrency retirement accounts, such as those offered by iTrust Capital, allow individuals to invest in cryptocurrencies within tax-advantaged retirement accounts. The video highlights the benefits of using these accounts for crypto investments, including potential tax-free or tax-deferred growth. This concept introduces an innovative way to integrate cryptocurrencies into traditional financial planning and retirement saving strategies.

💡Blockchain Technology

Blockchain technology is the decentralized, distributed ledger that underpins cryptocurrencies and enables transparent, immutable recording of transactions. The video mentions blockchain in the context of financial auditing and IRS enforcement, noting that all crypto transactions are recorded on the blockchain. This highlights the double-edged nature of blockchain: while it ensures security and transparency, it also facilitates tax authorities' efforts to trace and audit cryptocurrency transactions.

Highlights

Last year was the toughest tax year yet for crypto investors.

The importance of reporting all cryptocurrency investment activities.

Introduction to Cryptocasey and the focus on making crypto tax reporting easier.

Shout out to NordVPN for additional security in crypto investments.

Warning about rampant scamming activity in the finance and crypto space.

Congress and the IRS are making moves to improve taxpayer compliance for cryptocurrency transactions.

The IRS views cryptocurrencies as property for U.S. federal income tax purposes.

Cryptocurrency owners beware: the IRS is enforcing tax rules strictly.

Consequences of not disclosing crypto activity: interest, penalties, or criminal charges.

Personal experience of paying over $166,000 to the IRS due to crypto activity.

The taxable nature of various crypto transactions and activities.

Using tax sheltered retirement accounts for legally tax-free crypto trading.

Introduction to Cryptotrader.tax for easy crypto tax reporting.

The process of using Cryptotrader.tax: importing transactions, classifying, reviewing, and generating tax reports.

Recommendation to report all cryptocurrency investment activities to the IRS.

Transcripts

last year was definitely the toughest

tax year yet for crypto investors and

will likely get a little worse before it

gets better hello i'm cryptocasey and in

this video we are going to talk about

the importance of reporting all of our

cryptocurrency investment activities

including buying selling trading and

staking cryptocurrencies as well as nfts

and if you stick around until the end of

this video we are going to explore one

of the simplest and most cost-effective

services available at the time of this

video that will make our crypto tax

reporting process easier and more

efficient if you enjoy content where we

discuss topics like taxes and explore

products and services we can use to make

our lives easier let me know by liking

this video subscribing to my channel and

clicking the bell notification to stay

up to date on all the latest videos

before we get started i want to do a

quick shout out to nordvpn as a crypto

investor using a vpn is an easy

effective and important way we can

further protect our investments data and

privacy you can access the correct and

official site by using the link in the

description area below this link also

allows you to redeem their two year plan

at a 70 discount plus one month free of

protection cool

there is rampant scamming activity

happening in the finance and crypto

space right now with people and bots

creating duplicate social media accounts

of influencers and educators in the

financial space like myself the only

official accounts i have are listed in

the description area of these videos

anything not listed in the description

area of these videos is 100 a scam i

will never direct message you i will

never ask you for money or crypto i will

never ask you to install profit

generating or mining software on your

computer i do not offer consulting

services and i do not offer investment

services or anything remotely similar so

only use the links in the description

area to access my only official accounts

and please make sure to report any other

scam profiles that try to follow you

message you because their only goal is

to try to steal your money and crypto so

stay vigilant in these crazy times

crypto fam awesome let's talk texas

[Music]

march 5th 2022 congress and the irs

makes moves to improve taxpayer

compliance for cryptocurrency

transactions virtual currency disclosure

on form 1040. beginning with notice

2014-21

the irs has consistently taken the view

that cryptocurrencies are property for

u.s federal income tax purposes absent

any specific statutory or regulatory

exception u.s individual taxpayers are

generally required to report gains

realized on the sale of property

including cryptocurrency and pay tax on

these gains to remind taxpayers of this

requirement form 1040 now specifically

asks taxpayers whether they have

received sold exchanged or otherwise

disposed of any financial interest in

any virtual currency march 8 2022

cryptocurrency owners beware the irs is

trying to strip away excuses for

millions of people who aren't complying

with the tax rules on them either

inadvertently or on purpose so basically

you're playing with fire if you don't

report it what happens if you don't

disclose crypto activity this tax season

if you don't report transactions and

face an irs audit you may be hit with

interest penalties or even criminal

charges and they are not joking they've

already been doing this for the past

couple of years now in fact i had to pay

over 166 000 to the irs in 2020 alone

which part of it was regular income tax

a lot of long and short-term capital

gains from crypto activity and some of

that included interest and penalties

from just not being timely no failures

to disclose or anything it just took a

lot longer than i expected to get

everything sorted and ready to file my

tax return was literally over 800 pages

long or something ridiculous with all

the trading activity for the year and

check this out i couldn't even upload my

tax return to some financial

institutions websites when doing some

property investments because the file

was too big so yes you do have to pay

taxes on cryptocurrency if you sell or

exchange cryptocurrency you'll have to

pay capital gains taxes if you receive

crypto as payment or if you mine it it's

taxable income and yes you have to pay

taxes on the sale of nfts the irs treats

nfts short for non-functional tokens the

same as it does for any other real world

investment so when you trade any crypto

like bitcoin ethereum or any other

cryptocurrency for fiat or cash like the

us dollar that is a taxable event when

you trade crypto for another crypto a

lot of taxable events are occurring if

you sell the cryptocurrency for cash

less than 12 months from when you first

bought it the transaction is subject to

short-term capital gains which is your

regular income tax well if you sell the

same crypto for cash more than 12 months

after you bought it you only have to pay

the long term capital gains tax rate

which is generally 15

any rewards you receive from staking

airdrops mining interest from lending or

providing liquidity to liquidity pools

gains realized from nfts any extra

crypto you earn from participating in

and interacting with d5 protocols or

from regular centralized exchanges is

all taxable income yes crazy

here's the deal do not mess with the irs

sure they can't get everyone in the

short term right now but all of our

transactions are on the blockchain a

decentralized transparent immutable

ledger of every single move that we make

financial auditing is simpler than you

think with this new technology and if

the irs wants you they will get you 100

and since crypto is new bleeding edge

technology that is gaining popularity

and adoption at a quick pace this is

what the irs will do they are going to

tag a few people and make items out of

them by throwing the book at them very

hard even if their transgressions

weren't that terrible the irs is going

to put people in prison bleed them dry

and make their lives a living hell in

order to deter other people from not

reporting crypto activity don't be the

person the irs makes an item out of it

is not worth it we are all here to learn

about and invest in crypto to create a

better world and achieve financial

freedom but we can't do that if we don't

have our actual physical freedom because

we chose not to report crypto activity

and go to prison and just a quick fyi

there is a way you can trade crypto

legally tax free using tax sheltered

retirement accounts like iras i

personally decided to go with i trust

capital because they've got the lowest

transaction fees of all the other

competitors at one percent their monthly

account fee is non-existent zero dollars

which is pretty amazing when you

consider all the ridiculous fees

associated with traditional retirement

accounts and actually some of these

other crypto retirement accounts also

very soon i trust capital will be the

first and only cryptocurrency retirement

provider that will be able to support

staking as well as other defy related

activity so all staking rewards and

similar you accumulate in your

retirement account depending on whether

you qualify for a roth versus a regular

ira will be tax free or tax deferred

right now any staking lending or

liquidity you provide with block buy

voyager and similar are all treated as

taxable income so d5 within a retirement

account will be exceptionally

interesting and beneficial for us from a

wealth management standpoint so if you

would like to check them out make sure

to scroll down to the description area

below to access itrust capital's correct

and official site all while supporting

the channel awesome

now that hopefully all of us are making

the conscious decision today to report

all of our cryptocurrency investment

activities to the irs let's explore a

simple and easy solution that makes this

daunting task simpler and easier all

around using cryptotrader.tax

cryptotrader.tax at the time of this

video is still cryptotrader.txt

however they are rebranding soon to

their new name coin ledger so make sure

you scroll down to the description area

below to access the correct and official

site as we will continue to keep the

links up to date for you while they

finish up their rebrand i personally

started using them to aid in my

cryptocurrency tax reporting and i

intend to hand it over to my certified

public accountant for processing so

let's explore why i chose them over

competitors and why i think this is a

great service we can all benefit from

immensely as cryptocurrency investors

during this tax season out of all the

crypto tax reporting services out there

crypto trader.tax was by far the easiest

fastest and most efficient solution that

i came across and one of the best

aspects of their services is that you

don't have to pay up front you can start

calculating your taxes instantly without

any obligations and without having to

provide any credit card information so

you can use their platform for free you

can import all of your transactions and

see all of your complete gains and

losses overview for free and you only

have to pay if you want to physically

download your tax reports or send them

elsewhere cool and once you've gone

through their simple four-step process

you get the tax forms you need to

instantly file yourself upload to a

turbo tax or similar or hand off to an

accountant nice

now let's explore how simple and easy

cryptotrader.tax has made it to process

our crypto trading activity let's sign

up together and do a quick overview of

their platform

using the link in the description area

you will be brought to their sign up

page

select an account type either an

individual user or a tax professional

most of us are probably individual users

enter your email address create a

password confirm the password and click

the checkbox to agree to their terms and

conditions next you'll be brought to a

welcome screen

click continue select your country and

currency they use this to determine the

tax rules for your report and to

calculate your gains and losses then you

will need to select each crypto platform

you have ever used

note that you can also update this list

at a later time if you wish also note

that they have decentralized exchange

options like uni swap in addition to

centralized exchanges like coinbase and

crypto.com you can also choose the other

account option if you do not see a

platform you used on this list once you

are finished making your selections

click next you will need to access the

email account you used to sign up in

order to verify your email address

complete the email verification and you

should see this confirmation page click

let's go to continue to your dashboard

here you will see the crypto platforms

you selected as well as an option to add

more accounts nice so at the top here

you can see the four simple steps we

will take in order to generate our tax

reports import classify review and we

will get our tax reports step one is to

import your crypto trades start by

importing your crypto trading history

from all years and from all exchanges

into the app cryptotrader.tax will

automatically establish cost basis and

fair market value for these transactions

using historical data so here on our

dashboard we can add an account

and then connect the account if it's a

decentralized exchange like uniswap you

simply paste your ethereum public wallet

address in the field provided to connect

it or if it's a centralized exchange

like coinbase you can either import

transaction reports you download it from

coinbase by uploading the files here or

you can connect your account by signing

into coinbase here once all the

platforms you ever used throughout your

crypto journey are connected and all

trading activity has been imported then

you can move on to step two add crypto

income here you can add any historical

crypto income such as mining gifts or

even exchange rewards like airdrops and

if none of this applies to you this step

can be skipped so here on our dashboard

you can click step 2 called classify

here in this section you can classify

any deposits or withdrawals you made if

you were just transferring crypto

between your own wallets for storage

those are non-taxable self-wallet

transfers if you need to classify

deposits or withdrawals you didn't make

to or from yourself like if you received

a gift airdrop rewards from staking

mining or similar you can classify those

here by clicking the classify more

button and choosing from any of your

accounts to classify any transactions

you need for accurate reporting and if

you have more questions about how this

step works you could click on the learn

how it works button to read about it or

you can also reach out to the crypto

trader.tax support team their helpful

and responsive support team is another

reason i highly recommend giving them a

try they pride themselves on having the

best customer support in the industry

where they work with you real time to

answer crypto tax questions and help you

use the platform cool so once you've

classified any deposits or withdrawals

in step two you can move on to step

three where you generate your tax report

once all of your transaction history has

been imported the final step is to

review your data and generate your

report in this review section you might

receive a missing cost basis warning

this happens when the software detects a

transaction where you receive crypto

without classifying how you got it and

the price you acquired it for you can

avoid this by making sure all of the

platforms you've ever used throughout

your crypto journey are connected to

crypto trader as well as accurately

classifying any transactions necessary

in step two of this process if you go to

the review tab in step three you can

click on each transaction that was

flagged to see the potential impact it

could have on your tax report so if you

need more assistance with this part you

can read crypto traders guide all about

missing cost spaces here or you can

reach out to their support team and they

will help you get everything sorted nice

now we can move on to the fourth and

final step which is step four file your

crypto taxes after your report is

generated you can simply import it into

your favorite tax software such as

turbotax or taxact to file yourself or

send it off to your accountant to handle

for you here in the dashboard at step

four you can see your capital gains as

well as your total income you can see

the calculation method used your total

trades and you can add a tax

professional via email to send them your

reports amazing now to download your tax

reports to file yourself file with the

turbo tax or similar or provide to a tax

professional you need to upgrade this

upgrade involves completing a one-time

purchase which is once per tax season

that you choose to use their services so

if you had less than 100 crypto trades

their hobbyist plan is 49

if you did between 101 and 1500 trades

their day trader plan is 99

if you did between 1 500 1 and 5 000

trades their high volume plan is 199

and if you did over 5000 trades their

unlimited plan is 2.99 all of which is a

small price to pay for peace of mind and

a relatively painless crypto tax

reporting process so if you're

interested in checking out your tax

situation scroll down to the description

area below to check out cryptotrader.tax

which is soon becoming coin ledger by

clicking on this link awesome

thank you so much for taking the time to

watch this video if you enjoyed it

please make sure to like this video

subscribe to my channel and click the

bell notification to stay up to date on

all my latest crypto content so what did

you think about cryptotrader.tax are you

going to check them out to figure out

your crypto tax situation what other

resources are you planning to use to

process your crypto taxes let me know in

the comments below

be safe out there

[Music]

you