Harness Wealth CPAs represent clients that hold crypto assets that invest long-term, actively trade, farm, stake, as well as mine. We’re here to help guide you through your crypto taxes so you can focus on building, investing and trading.

Crypto Asset Taxes in the United States

One of the most common misconceptions about crypto assets is that, because they are not issued by a central government or regulated as securities, there is no need to pay taxes on profits from investing, trading, farming, staking or mining them.

In the United States all profits made from the purchases and sales of crypto assets such as Bitcoin, Ethereum and NFTs are subject to capital gains taxes (including airdrops). This is because they are treated as property (much like stocks, real estate, or gold).

The laws around how crypto taxes work are fairly new and will continue to evolve alongside this groundbreaking technology. This makes it all the more important to consult an expert if you’ve experienced profits (or losses) via any crypto asset related activities this year, and to plan ahead for future years as well if crypto assets makes up a sizable chunk of your assets.

IRS Crypto Asset Laws: Keeping Records, Taxable Events, and Capital Gains and Losses

While every individual’s experience is different and subject to the tax laws of their specific jurisdiction, the high-level crypto asset tax rules you should be aware of are that:

These bullet points are a brief summary, but there are other detailed rules and regulations around crypto taxes that any serious investor, trader, farmer, staker or miner should be aware of.

If you took part in anything other than simply buying crypto to hold in a wallet, you should highly consider discussing your potential tax liabilities with a professional. While the laws will continue to develop, one thing is clear: the IRS expects you to make a good faith effort in reporting crypto asset activities.

Crypto Assets Alongside Your Other Assets: Help from CPAs and Financial Advisors

Harness Wealth works with tech founders, employees, and VCs — these folks were typically very early adopters of crypto given their industry, and we’ve seen crypto make up increasingly sizable portions of investment portfolios. As this happens, there are not only tax questions but overall investment management questions that arise, particularly around risk.

The technology is exciting, but many people are failing to grasp the reporting requirements as vendors play catch-up in providing users with the documentation they need (and is legally required!).

A clear understanding of your personal tax responsibilities is vital to participating in the growing crypto economy. Sign up with Harness Wealth today to find both tax and financial advisors that will ensure that your crypto and overall assets are protected.