Proven Tax Planning Strategies from New York’s Crypto Tax Experts

Cryptocurrency sparks excitement in most New York based investors who are looking for new financial initiatives to strengthen their businesses. Cryptocurrency is a digital currency that does not have to follow the rules of any central government authorities. Most cryptocurrencies are decentralized networks based on blockchain technology, making it a faster, cheaper, and more secure way to transfer money.

The only setback, or rather, the responsibility that comes with cryptocurrency is tax planning. Particularly in New York, cryptocurrency is regarded as property within the legal framework. However, there is no need to worry. A certified crypto tax expert will not only manage your crypto tax obligations for you, but these tax professionals have expertise in applying proven tax planning strategies to optimize your business’s financial performance.

1. Strategies Used by Crypto Tax Experts

Cryptocurrency taxation laws are quite complicated and require the expertise of experienced crypto tax experts who have the adaptability to employ different strategies for different crypto trading outcomes. The overall goal of crypto tax experts is to optimize tax outcomes for your business while ensuring compliance.

In order to do this, crypto tax experts offer crypto accounting services such as tax loss harvesting where they sell underperforming assets to offset capital gains from more profitable investments. This is a great strategy to reduce overall tax liability.

Another important strategy used by crypto tax experts is deciding an effective account method to report crypto transactions based on the trading patterns of the business. Crypto tax experts select either the FIFO accounting method or the LIFO accounting method depending on the method that may yield the most favorable tax outcome.

In addition, crypto tax experts from reputed crypto CPA firms use software tools designed for tracking transactions in order to streamline the process of compiling data for tax returns. Through accurate tracking, your business can stay in compliance with IRS regulations as taxpayers in New York should be transparent with their financial records on crypto transactions.

Not only do crypto tax experts optimize financial performance by selecting the right accounting methods and automation tactics, they are also updated on evolving regulations surrounding cryptocurrency. While this may not sound like a strategy to you initially, note that tax laws related to cryptocurrency change all the time. Therefore, unless the crypto tax expert you hired is knowledgeable and capable of adapting to new requirements swiftly, your business might end up getting into trouble.

2. Advantages of Cryptocurrency for Your Business

Once you have eliminated the risks associated with cryptocurrency taxation by hiring a dedicated crypto accounting firm that can outsource crypto tax experts for you, you do not have to worry about things like penalties or audits.

There are numerous benefits that come with cryptocurrency operations relative to fiscal currencies. For one, crypto is faster and cheaper than traditional banking methods. Your business gets to eliminate intermediaries for payment processing and transaction fees are reduced as well. This is especially useful for international transactions. However, make sure that the crypto tax expert or crypto accounting firm you partner up with is knowledgeable on international tax laws related to crypto.

Another advantage that comes with crypto which you simply cannot ignore is its high security standard. Cryptocurrencies operate on blockchain technology, which provides a high level of encryption.

Since all transactions are recorded on a public ledger that is immutable and transparent, businesses have a secure payment gateway. What’s more, crypto is a great way to attract a new customer demographic that prefers digital currencies for their purchases due to the privacy and security that comes with it.

3. Cryptocurrency Tax Benefits

To reap the tax benefits offered by cryptocurrency transactions, you need to consult crypto tax experts who have experience in finding the best ways to ensure capital gains tax savings. When crypto tax experts maintain accurate records, you can make informed financial decisions before expanding to unknown jurisdictions.

Although crypto is treated as a property in the USA, some jurisdictions have lower tax obligations too. Crypto tax professionals can evaluate your crypto investments and figure out the most profitable way for you to expand in the future.

It's important not to view crypto tax planning as a burden on your business. Trying to find loopholes and evade crypto tax returns is not going to help you approach crypto investments with confidence. Such practices are, of course, illegal in most jurisdictions, including New York.

You do not have to let crypto tax planning cause you stress. Book a free consultation with OnChain Accounting today and let our experienced crypto tax experts guide you through the process. Meet your tax obligations while stepping up your game as a smart crypto investor!