New IRS Crypto Tax Reporting Rules

Breaking down the latest regulations and what they mean for cryptocurrency investors

In a move to improve tax compliance within the cryptocurrency industry, the IRS and U.S. Department of Treasury finalized new regulations on June 28, 2024. These regulations aim to streamline crypto tax reporting for both investors and the government, effective for transactions starting in 2025.

Key takeaways for cryptocurrency investors:

What this means for you:

Crypto Accounting Software Free vs Paid

The world of cryptocurrency is exciting, but for businesses dealing with digital assets, accounting can quickly become a complex headache. Traditional accounting software isn't equipped to handle the intricacies of crypto transactions, and manually tracking everything in spreadsheets is prone to errors and time-consuming. This is where crypto accounting software steps in, offering a streamlined solution for managing and reporting on your crypto activities.

However, with a growing market comes a variety of software options, both free and paid. While free plans might seem tempting at first glance, they often come with limitations that can hinder your business's needs. Let's delve deeper into the world of free vs paid crypto accounting software, exploring the features, limitations, and ultimately, how to choose the right tool for comprehensive crypto management.

Why Use Crypto Accounting Software?

Before diving into the specifics of free and paid options, it's crucial to understand why crypto accounting software is essential for businesses. Here are some key benefits:

Free Crypto Accounting Software: A Starter, But Not a Long-Term Solution

Free crypto accounting software can be a good starting point for individuals or businesses with a small number of crypto transactions. However, there are limitations to consider:

Here are some popular free crypto accounting software options to keep in mind:

Paid Crypto Accounting Software: Power Up Your Crypto Management

Paid crypto accounting software offers a broader range of features and functionalities, catering to the needs of businesses of all sizes. Here's what you can expect:

While there's an upfront cost, the benefits of paid crypto accounting software can outweigh the expense, especially for businesses with significant crypto activity. Here are some leading paid crypto accounting software options to consider:

Choosing the Right Crypto Accounting Software

Now that you understand the limitations of free software and the power of paid options, it's time to choose the right tool for your business. Here are some key factors to consider:

It's also recommended to take advantage of free trials offered by many paid software providers. This allows you to test drive the features and see if the software aligns with your workflow before committing.


Cryptocurrency offers exciting business opportunities, but managing it effectively requires the right tools. Free crypto accounting software can be a stepping stone for beginners, but paid software is the clear winner for businesses with any significant crypto activity. Consider your specific needs, budget, and desired features to choose the perfect crypto accounting software solution.

By automating data import, ensuring accurate tax calculations, and providing valuable insights, crypto accounting software empowers businesses to navigate the ever-evolving world of cryptocurrency confidently.

How to Find a Crypto Tax Accountant in May 2024

The world of cryptocurrency can be exciting and lucrative, but it can also feel like wading through a digital jungle come tax time. Unlike traditional investments, crypto transactions are complex and can trigger a variety of tax implications. Fear not, intrepid crypto investor! This guide will equip you with the knowledge and resources to find a qualified crypto tax accountant and confidently navigate the tax season.

Why You Need a Crypto Tax Accountant

While some crypto enthusiasts may be tempted to tackle their taxes solo, there are several compelling reasons to enlist the help of a professional:

Qualities of a Great Crypto Tax Accountant

Now that you understand the importance of a crypto tax accountant, how do you find the right one? Here are some key qualities to look for:

Costs for a Professional Crypto CPA

The cost of hiring a crypto tax accountant can vary depending on several factors, including:

Here's a general idea of the range you can expect to pay for crypto tax accountant services:

It's important to get quotes from several accountants before making a decision. Be sure to ask about their experience with crypto taxes, the services they offer, and their fee structure.

Finding Your Crypto Tax Accountant

Here are some effective strategies to find a qualified crypto tax accountant:

Questions to Ask Before Hiring a Crypto Tax Accountant

Once you've identified a few potential candidates, schedule consultations to ask them key questions. Here are some important points to cover:

Preparing for Your Crypto Tax Consultation

To ensure a smooth consultation, gather your crypto-related documents beforehand. This may include:

Navigating Crypto Tax Season with Confidence

Following these tips, you can confidently find a qualified crypto tax accountant and ensure your tax return is filed accurately and efficiently. Remember, a good accountant is an investment that can save you money and headaches in the long run. They can also help you develop tax-saving strategies for your future crypto endeavors.

Bonus Tip: Don't wait until the last minute! The earlier you start gathering your records and contacting potential accountants, the smoother your tax season will be.

Understanding the New IRS Form 1099-DA (2024 Update)

The IRS is gearing up for a major shift in how digital asset transactions are reported. With the introduction of Form 1099-DA (currently in draft form), slated for use in 2025, investors and tax professionals must be prepared for the intricacies of this new form. While it aims to streamline reporting, there are new hurdles to navigate. This comprehensive guide will break down the key elements of Form 1099-DA, highlight potential trouble spots, and offer tips to ensure smooth sailing come tax season.

Key Reporting Requirements of Form 1099-DA

Wash Sales: A Grey Area

The form includes a section for reporting disallowed losses from wash sales. Here's the catch: current wash sale rules for stocks and securities aren't universally applied to cryptocurrencies or other digital assets. This ambiguity can lead to confusion and potentially inaccurate reporting. The best course of action? Stay tuned for further IRS guidance on how these rules will be applied to the crypto world.

Non-Cash Transactions

Form 1099-DA also considers transactions where the proceeds are not in cash, but in services or other digital assets. This throws another wrench into the valuation process. Reporting entities will need to determine the USD value of any crypto-to-crypto trades, potentially leading to discrepancies between reported figures and your actual gains or losses.

Navigation Tips for Taxpayers and Professionals


While Form 1099-DA marks a significant step towards integrating digital asset transactions into the standardized tax reporting system, it also introduces new complexity layers for taxpayers and professionals. The issues surrounding basis reporting and the treatment of wash sales require particular attention, as they can lead to confusion, errors, and increased IRS scrutiny.

By maintaining meticulous records, seeking professional advice, and staying informed about regulatory changes, taxpayers can navigate these challenges more effectively and minimize their risk exposure. However, clearer guidance and a resolution of inconsistencies within Form 1099-DA from the IRS are crucial for a truly transparent and equitable reporting process.

IRS Ramps Up Crypto Tax Efforts with New Hires

The IRS is taking a big step towards improving cryptocurrency tax compliance by bringing on two private sector experts: Sulolit “Raj” Mukherjee and Seth Wilks. Both have extensive experience in both tax and crypto, and will help the IRS build service, reporting, compliance, and enforcement programs focused on digital assets.

Why is the IRS focusing on Crypto?

The cryptocurrency and digital asset space is complex and rapidly evolving, which creates challenges for tax administration. The IRS wants to ensure taxpayers are meeting their filing obligations and to improve enforcement efforts.

What do the new hires bring to the table?

What does this mean for the future of Cryptocurrency Tax and Accounting?

This signals a clear shift towards increased scrutiny of cryptocurrency tax compliance. Taxpayers can expect to see more regulations and requirements in the coming years. The IRS also focuses on criminal investigations related to crypto, with increased cases involving unreported capital gains and failure to disclose ownership.

Overall, the IRS is ramping up its efforts to catch up with the cryptocurrency industry and ensure proper tax compliance. It remains to be seen how effective these efforts will be, but taxpayers should be aware of the increased focus on crypto taxes.

Conquer Tax Season: A Guide to Gathering Paperwork

Filing taxes can feel overwhelming, but taking control of the process starts with organization. This guide empowers you to gather the necessary paperwork before meeting with your CPA, ensuring a smooth and efficient tax filing experience.

Remember: This list serves as a general framework, and your specific situation may require additional documents. Consulting your CPA beforehand is always recommended.

Forms and Associated Taxes for Independent Contractors

Form W-9: Requesting Taxpayer Information

Form 1099-NEC: Reporting Non-Employee Compensation

Withholding on Non-Employee Compensation:

Electronic Filing Options:

Important Note:

Remember, this is a simplified guide. For specific details and compliance requirements, consult the official IRS resources and seek professional tax advice if needed.

Beyond Your Paycheck

Contributions and Distributions Demystified

Healthcare Coverage & Savings

Keeping Track of Mortgage and Property Taxes

Adapting Your Paperwork for Tax Filing

Arriving at Your First CPA Meeting with Confidence

Arrive at your first CPA meeting prepared and confident with this checklist. Remember to bring crucial personal information, including your full name, Social Security number, date of birth, and the same for any spouse or dependents. By taking charge of your paperwork, you can ensure a smoother and more efficient tax filing experience.

FAQs (Frequently Asked Questions)

What if I'm missing some paperwork?

It's crucial to make every effort to gather all necessary documents. However, if you're missing something, inform your CPA during your meeting, and they can advise you on the best course of action.

Do I need physical copies of all documents?

While physical copies can be helpful, many CPAs utilize digital platforms for document submission. Check with your CPA to see if digital copies are acceptable.

What if I have income from multiple sources?

If you have income from various sources, ensure you gather all relevant documentation for each income stream to accurately report your earnings.

How can I ensure I have everything I need?

Review this checklist carefully and cross-reference it with your personal financial records to ensure you haven't missed anything important.

What should I do if I'm unsure about a specific document?

If you're uncertain about whether a document is necessary, it's best to include it anyway and let your CPA determine its relevance during your meeting.

Roundup of Cryptocurrency Tax Updates

Welcome to the February edition of our monthly cryptocurrency tax news roundup! This month, the focus is on filing your 2023 taxes and strategizing for 2024, with insights from industry experts and even some concerns from the International Monetary Fund (IMF).

Stay Ahead of the Curve:

Budget 2024: Crypto industry’s wait for lower tax rates continues

Bitcoin Taxes in 2024: Key Points

6 Things Tax Professionals Need to Know About Cryptocurrency Taxes

Tax professionals are increasingly recognizing the importance of understanding cryptocurrency taxation due to its growing prevalence in investment portfolios. Thomson Reuters highlights six crucial aspects that tax professionals should be aware of:

Crypto Tax Season 2024

Mark your calendars, crypto holders! Tax season is upon us, and with it comes the responsibility of reporting your cryptocurrency transactions. Let's demystify the process and ensure you file smoothly, avoiding any unwanted penalties.

Key Dates to Remember:

Crypto-Specific Considerations:

Tips for a Smooth Filing:

Remember: Failing to report your crypto activity can lead to hefty penalties and interest charges. By staying informed, being proactive, and seeking professional help when needed, you can navigate crypto tax season confidently and avoid any unwanted surprises.

Bonus: This blog post is just a starting point. For in-depth guidance and personalized advice, consult a qualified tax professional specializing in cryptocurrency. They can help you navigate the complexities of crypto tax regulations and ensure you're maximizing deductions and minimizing potential tax liabilities.

Cryptocurrency Tax Notices

Cryptocurrency, the thrilling world of innovation and financial opportunities, holds a hidden challenge—tax obligations. As the Internal Revenue Service (IRS) sharpens its focus due to a staggering 75% non-compliance rate in cryptocurrency reporting, investors and enthusiasts find themselves navigating treacherous waters. In this guide, we unveil the complexities of tax notices, offering insights and steps to ensure your compliance and peace of mind.

Understanding the Landscape of Cryptocurrency Tax Notices

Cryptocurrency tax notices revolve around underreporting or non-reporting assets. The three main notices—6173, 6174, and 6174A—each carry unique implications, requiring different responses.

1. 6173 Notice and 6174A Notice

These notices are primarily informational, informing you of on-chain cryptocurrency transactions. No immediate action is needed; they suggest filing amended returns if discrepancies arise.

2. 6174 Notice

Unlike the informational notices, a 6174 notice demands a timely response. Failure to address it promptly may lead to escalated tax notices, emphasizing the need for a careful review.

Step-by-Step Instructions to Responding Effectively to Cryptocurrency Tax Notices

When faced with a tax notice, take these steps to navigate the complexities and ensure compliance:

1. Contact Your CPA

Upon receiving a tax notice, your first move is to reach out to a Certified Public Accountant (CPA) experienced in cryptocurrency taxes. They guide you through the necessary steps.

2. Detailed Review with Your CPA

Collaborate with your CPA to review the notice thoroughly. Identify the type of notice and determine the appropriate response based on your circumstances.

3. Update Cryptocurrency Accounting

Adjust your cryptocurrency accounting based on the notice. Work closely with your CPA for accuracy, proper documentation, and diligence in reporting.

4. Amend Prior Year Tax Returns

After analyzing the notice, amend prior year tax returns or file delinquent returns. Bringing filings up to date is crucial to rectify any omissions related to cryptocurrency transactions.

5. Craft a Thoughtful Response

If a response is necessary, work with your CPA to craft a tailored and thoughtful reply. Responses vary based on circumstances, ensuring a professional and effective response.

The Educational Nature of Tax Notices

Not all tax notices are punitive; some serve an educational purpose. The IRS aims to increase overall tax compliance, sending letters to both compliant and potentially non-compliant taxpayers, and educating them about reporting obligations in the cryptocurrency space.

Web3 Tax Implications for DAOs

1. Introduction: The Game-Changing World of DAOs in Web3

In the fast-evolving landscape of cryptocurrencies and Web3 technologies, Decentralized Autonomous Organizations (DAOs) have taken center stage, transforming how we collaborate and structure organizations. Delving into the intricacies of tax implications is essential. This guide, titled "Web3 Tax Implications for DAOs," breaks down the complexities to help ensure effective tax compliance.

2. How DAO's are Structured and Taxed

DAOs operate through decentralized governance, rewarding members with blockchain tokens. Establishing a legal entity structure is a crucial first step, offering options from LLCs to unincorporated nonprofit associations. Working alongside legal and CPA experts ensures not just compliance but also strategic tax optimization.

3. Starting the DAO Journey

Initiating Token Rewards for DAO Members
In the early stages, DAO members are often gifted governance tokens, usually not triggering taxable events. However, as DAOs progress, selling governance tokens for funding introduces potential capital gains, demanding careful tracking and reporting for tax returns.

4. Tax Considerations for Individual DAO Members

4.1 Navigating Tax Landscapes for Members
Individual members face nuanced tax landscapes. While initial token issuance is typically non-taxable, subsequent transactions, such as selling governance tokens, may trigger taxable events. Members providing services or goods must diligently track and report these transactions on their tax returns.

5. Navigating Capital Gains in the DAO Universe

Managing Asset Transactions for DAOs
Pooling resources for crypto assets and NFTs often triggers capital gains events for DAOs. Transparent reporting at the entity level is crucial, including claiming income generated through airdrops or other means. Robust record-keeping and adherence to tax regulations are pivotal.

6. NFT Sales: Simplifying Sales Tax and VAT Compliance

Ensuring Tax Compliance for NFT Sales
For DAOs involved in selling NFTs, complying with sales tax and Value-Added Tax (VAT) is crucial. Various jurisdictions impose consumption taxes on NFT sales, demanding meticulous collection and remittance by the DAO to ensure operational smoothness and mitigate legal risks.

7. Dual Reporting: DAOs and Members at Tax Time

The Crucial Role of Documentation
Accurate documentation is crucial, considering DAOs and their members are subject to distinct tax and accounting requirements. A robust accounting system with integrated digital asset sub-ledgers ensures a clear audit trail for all digital asset activities.

8.Proactive Planning with a CPA in the Web3 Era

Proactively Planning with a CPA
Operating a DAO or being a member requires proactive planning and collaboration with a Certified Public Accountant (CPA). Aurum FSG specializes in guiding through the intricacies of tax planning, filing, and digital asset accounting, ensuring financial security in the Web3 landscape.

9. Navigating the Web3 Tax Landscape with Expert Precision

In the dynamic realm of Web3, DAOs represent a paradigm shift, requiring careful consideration of tax implications. Understanding entity structures, token transactions, and asset acquisitions allows DAOs to navigate the complex web of tax regulations. Success lies in collaboration—with legal teams, CPAs, and financial experts—to strategically plan, optimize, and ensure compliance, safeguarding both DAOs and individual members in the ever-evolving landscape of Web3.