Why Every Crypto Millionaire Hires a Crypto Tax CPA And You Should Too

If you have been tracking the meteoric rise of crypto riches, you might have seen something that bonds most crypto millionaires. They don't take the time to do it themselves on their own with do-it-yourself tax software or try complicated crypto taxes. Instead, they hire a crypto tax CPA, a cryptocurrency tax specialist familiar with the unusual pitfalls of cryptocurrency taxation.

But why is a crypto tax CPA so critical to high net worth crypto investors? And why should you have one on your team even if you're not a millionaire yet? Let's get into the number one reason.

1. Cryptocurrency Taxes Are Complex and Ever-Changing

Unlike traditional investments, cryptocurrency tax law is still evolving. The majority of cryptocurrencies are treated as property by the IRS, and thus any transaction buying, selling, trading, staking, or even receiving an airdrop can be a taxable event. The landscape is even more complex with decentralized finance, NFTs, cross-border transactions, and other emerging crypto innovations.

For most investors, monitoring the tax implications of every single transaction can become daunting very quickly. A single error, such as not reporting an airdrop or incorrectly classifying a trade, can result in expensive audits or fines.

This is where a crypto tax CPA shines. These professionals stay up to date with the latest IRS regulations, state laws, and international laws. They know how to interpret ambiguous rules and correctly apply them to your portfolio with as few errors as possible.

2. Strategic Tax Planning Is a Game Changer

Crypto millionaires do not merely do their taxes; they plan ahead, in fact, to reduce their tax bill legally. This is the exact opposite of what most retail investors are doing.

A crypto tax CPA works with investors to engage in strategic planning, like:

• Tax loss harvesting: selling investments for a loss to offset gains and reduce taxable income
• Timing transactions for selling or swapping assets at the best moment to realize long-term capital gains rates or take advantage of lower years of income
• Entity structuring, setting up LLCs, trusts, or other entities to shelter assets and income from taxes
• Navigating complex sources of income, handling taxes on staking rewards, DeFi income, or mining income, all of which are subject to special tax treatments

These approaches require professional tax knowledge and also typically individual advice, something not effectively offered by a generic CPA or tax course.

3. Crypto CPAs Reduce Threat of Audit and IRS Notice of Audit

Cryptocurrency has experienced tax enforcement grow significantly over the last few years. The IRS has acquired sophisticated software to track cryptocurrency transactions and is sending more notices of audit to taxpayers who have crypto activity. Because crypto is borderless and anonymous, they are keen on detecting underreporting.

A crypto tax CPA recognizes IRS audit warning signs of cryptocurrency and maintains your reporting accurate and compliant. They'll complete your tax return with full documentation, offer audit representation as required, and even speak on your behalf to the IRS.

This kind of expertise instills confidence in investors who hold significant crypto positions, a guarantee that can't be provided by DIY filing or basic software.

4. What About the Cost? Consider the ROI

There are certain investors who are not willing to hire a crypto tax CPA because they don't wish to pay fees, but look at the following: the tax savings, risk avoidance, and time saved generally far outweigh the cost of professional services.

Mistakes on your crypto taxes will bear penalty interest and costly audits or even criminal investigations in the worst possible situation. Conversely, a CPA's expertise can uncover legitimate deductions and moves that set you up to save thousands or tens of thousands of dollars from your tax burden.

For most millionaires, the cost of a crypto tax CPA is an investment that pays for itself many times over.

5. Take Action Now

The world of crypto is exciting but challenging. The best method of coordinating your tax situation and financial success is with expert help. That is why so many crypto millionaires come to depend on a crypto tax CPA.

If you're serious about your crypto investing and do not wish to make costly mistakes, an investment in a crypto tax CPA is one of the smartest investments you can make. They are not only tax preparers, they are your compliance guides, cost-saving experts, and smart planning advisors in the ever-changing world of crypto taxation.

Don’t wait until tax time or an audit catches you off guard. Start today with a crypto tax CPA from Onchain Accounting and get your crypto financial life in order.