The Complete Guide to Crypto Accounting and Taxes

Cryptocurrency has created an entirely new asset class with unique tax implications. With hundreds of taxable events per year, calculating crypto gains, income, and losses for tax reporting is extremely complex. This guide provides an in-depth look at crypto taxes, common challenges, and how OnChain Accounting’s crypto-specialized CPAs can ensure you fully comply with taxes owed.

1. Overview of Cryptocurrency Taxes

Unlike stocks which mainly trigger taxes at sale, crypto can create tax liabilities through:

• Trading one coin for another
• Spending crypto on goods/services
• Mining and staking rewards
• Lending and borrowing
• Gifts of crypto
• Airdrops
• Converting crypto to fiat currency

This means most crypto investors deal with dozens of taxable events each year. Meticulous record-keeping is essential to track:

• Date of transaction
• Type of transaction
• Cryptocurrencies involved
• Fair market value at the time
• Associated fees/costs

Thorough documentation provides the raw data to calculate capital gains, capital losses, income, and more. Without it, you risk incorrect tax filings along with penalties and interest.

2. Major Pain Points of Crypto Taxes

Cryptocurrency taxes present major challenges including:

No 1099 Tax Forms

Financial institutions send 1099s for stocks, interest, dividends summarizing data for filing taxes.

Crypto exchanges and platforms do not issue 1099s. The taxpayer must independently compile and document every single transaction.

Confusing Cost Basis Calculations

Cost basis is the original value of an asset for tax purposes. Correctly calculating it is crucial for reporting capital gains and losses.

But with crypto, determining cost basis across exchanges, DeFi protocols, NFT platforms, and blockchains is extremely confusing.

Hassle of Amending Incorrect Past Filings

Many investors realize they incorrectly filed crypto taxes in previous years with incomplete data. Amending past returns to correct it is a big hassle.

High Risk of IRS Audit and Penalties

Lack of 1099s means crypto taxes rely completely on self-reporting. This greatly increases the chance of an IRS audit, which means providing comprehensive documentation.

Complex Tax Rules Across Countries

For global crypto investors, each country has different tax rules and forms. Ensuring compliance in multiple jurisdictions is difficult.

This combination of pain points means most crypto investors desperately need help to properly file taxes.

3. Why OnChain Accounting is the Solution

OnChain Accounting specializes in end-to-end cryptocurrency tax preparation tailored to each client’s specific activity and needs.

Some key benefits include:

• CPA-level crypto tax experts: OnChain’s tax pros have deep mastery of crypto accounting/tax rules.
• Integrations with all major platforms: Automatically import all transaction data with API connections.
• Accurate capital gains/income calculations: Software crunches the numbers based on transaction data.
• Amendment support for prior years: Past incorrect filings can be amended with good records.
• Audit assistance: Detailed documentation helps fight any IRS inquiries.
• Customized international support: Partnerships with tax firms in over 30 countries.

OnChain Accounting was created by crypto investors to solve the unique pain points of crypto tax preparation.

4. OnChain Accounting’s Crypto Tax Preparation Process

OnChain Accounting follows a simple 5-step process for worry-free crypto tax filing:

1. Connect Your Crypto Platforms

OnChain integrates with all major exchanges, wallets, blockchains, DeFi platforms, NFT markets, and anything else with taxable crypto transactions.

Connecting apps and accounts allows automatic importing of your complete transaction history.

2. Review and Confirm Transaction Data

You can review all imported data and confirm it is complete and accurate. Add any missing transactions and edit details as needed.

3. Generate Required Tax Forms and Filings

Based on your cleaned transaction data, OnChain’s tax software automatically generates required IRS forms, such as:

• Form 8949: Details every crypto sale, trade, etc. with cost basis and capital gain/loss calculated
• Schedule D: Overall summary of capital gains and losses across all investments
• Form 1040 Schedule 1: Reports any additional crypto income

4. Apply Tax Minimization Strategies

OnChain Accounting crypto tax experts review your details and apply legal tax optimization strategies to minimize your liability.

5. Submit Your Return and Relax

With 100% accurate, CPA-prepared filings in hand, submit your taxes knowing you are fully compliant. No stress for amendments or audits!

OnChain Accounting handles the full crypto tax preparation process from data collection to optimized filing.

5. OnChain Accounting Service Packages

OnChain Accounting offers tiered packages based on your volume of crypto activity:

Tax Reports Package

• Ideal for 1-2 exchanges & wallets
• Connect platforms & generate tax reports
• DIY filing guidance provided
• Starting at $499

Expert Review Package

• For active traders with 3+ platforms
• Tax expert reviews your generated forms
• Tax planning advice included
• Starting at $999

Full Service Package

• For high volume traders with extensive activity
• Handle full tax prep and filing process
• Full income/capital gains reporting
• Audit support included
• Starting at $1,499

6. Customer Success Stories

OnChain Accounting has helped thousands of crypto investors properly file their taxes and avoid costly penalties. Here are a few examples:

Reduced Tax Bill By $8,123

“I traded crypto actively across 5 different exchanges in 2021. OnChain imported all my messy transaction data and helped me claim an extra $18k in capital losses I didn’t even know I had! This reduced my tax bill by over $8,000 compared to my first attempt at filing myself. Their full service package was worth every penny.”

– Robert S, Atlanta, GA

Completed 3 Years of Amended Returns

“I realized I needed to amend my 2019, 2020, and 2021 tax returns because I failed to fully report my crypto activity. OnChain Accounting handled the amended filing process for all 3 years seamlessly. I provided the transaction details and their experts generated the corrected forms and submitted them. A huge relief to get this fixed!”

– Lauren J, Detroit, MI

Saved $220,000 in Taxes for Crypto Business

“As a cryptocurrency business owner, I was struggling with properly reporting business income and expenses across multiple entities and jurisdictions. OnChain Accounting’s enterprise tax package helped us organize everything and leverage deductions we didn’t know we could take. We ended up saving over $220k in taxes the first year!”

-Chris K, Silicon Valley, CA

7. Frequently Asked Questions

How much does OnChain Accounting’s crypto tax preparation cost?

Pricing starts at $499 for simpler filings and scales based on number of crypto transactions. More complex returns with full service assistance start at $1,499.

What is included in the full service package?

The full service package includes importing all transaction data, generating required tax forms, having an expert complete the filing process for you, and full audit support.

Does OnChain Accounting handle business crypto taxes too?

Yes! OnChain Accounting offers specialized small business and enterprise crypto tax packages to handle business income, payroll taxes, deductions, and multi-entity reporting.

Can you help with correcting past years I filed incorrectly?

Absolutely. OnChain’s amended return preparation services can correctly re-file previous tax years once you provide complete transaction data.

Is OnChain Accounting available outside the US?

Yes, OnChain Accounting has partnerships with leading crypto tax experts in over 30 countries to assist non-US investors.

8. Conclusion

Cryptocurrency taxation is incredibly complex. OnChain Accounting leverages crypto-specific tax expertise and software to automate the process end-to-end. From data import to optimized filing, they provide a complete solution tailored to your specific activity and needs. Contact OnChain Accounting today to discuss how we can help reduce your tax liability this season!