As we near the 2021 Filing Season we are preparing our Organizers to send out in January.
Since Crypto really took off in 2020 & 2021 we have found it prudent to mention the reporting obligations to our clients as the IRS is pursuing nonreporting currently.
The issue is that the crypto world moves fast, and investors may only have $10 in their account but buy and sell an unlimited amount of times throughout the year, with each transaction needing to be disclosed.
There is software available online that will download the transactions from the wallet(s) and compile the 8949s and we would like to suggest some to our clients in the letter.
So, after the long winded explanation, I am wondering if anyone has and experience with those softwares, and which ones you would recommend that import well into Lacerte.
Chad Gruber CPA
Best Answer Click here
I had about five clients delve into crypto for 2020 returns. I made them all sign up for either CoinTracker.io or BitCoin.Tax and pay for the tax package to generate 8949's, etc. I input the summary info into the Disposals screen, checked the box for attachments, and then attached the detail PDF reports.
I have since come to realize that those (and all other) aggregation software options have their limits. The biggest issue is that they ignore the "balance sheet," for lack of a better term. They don't reconcile the crypto activity to ending crypto balances. So if a user lends some coin, or some other complicated transaction, it may not be reported correctly, and there are no diagnostics to point out potential holes to you.
So for me, I partnered with an EA buddy who specializes in crypto. He uses a number of software tools (including ButCoin.Tax as an aggregator) to get comfortable that he's accounted for all the data. With the lack of IRS guidance, much of this reporting is subject to judgment and interpretation, but he's in the space enough to know what he's looking for/at, unlike me.
My five clients have been told that if they want me to do their taxes, they have to hire him for the crypto. He'll have them sign two 7216's (both ways, for me to talk to him and for him to talk to me about our mutual clients) and give me the crypto reports I need to incorporate into their returns.
As far as any concerns over my clients just going to him for the whole tax return, let them. Abundance, not scarcity. He and I both feel that way. Also, I'm in CA, and he doesn't want any more fed/state diffs to deal with, so he's not likely to accept them anyway. 😉
Between the two, I like BitCoin.Tax over Cointracker.io. Cointracker's head guy is on Twitter and regularly posts some incorrect tax advice. I used Cointracker more last year because the accountant version was free and I could invite clients easier. BitCoin.Tax charges accountants for a profile, but I had a client who went there on her own and just gave me access after-the-fact, and that didn't cost me anything.
Best of luck with however you decide to treat this!
I had about five clients delve into crypto for 2020 returns. I made them all sign up for either CoinTracker.io or BitCoin.Tax and pay for the tax package to generate 8949's, etc. I input the summary info into the Disposals screen, checked the box for attachments, and then attached the detail PDF reports.
I have since come to realize that those (and all other) aggregation software options have their limits. The biggest issue is that they ignore the "balance sheet," for lack of a better term. They don't reconcile the crypto activity to ending crypto balances. So if a user lends some coin, or some other complicated transaction, it may not be reported correctly, and there are no diagnostics to point out potential holes to you.
So for me, I partnered with an EA buddy who specializes in crypto. He uses a number of software tools (including ButCoin.Tax as an aggregator) to get comfortable that he's accounted for all the data. With the lack of IRS guidance, much of this reporting is subject to judgment and interpretation, but he's in the space enough to know what he's looking for/at, unlike me.
My five clients have been told that if they want me to do their taxes, they have to hire him for the crypto. He'll have them sign two 7216's (both ways, for me to talk to him and for him to talk to me about our mutual clients) and give me the crypto reports I need to incorporate into their returns.
As far as any concerns over my clients just going to him for the whole tax return, let them. Abundance, not scarcity. He and I both feel that way. Also, I'm in CA, and he doesn't want any more fed/state diffs to deal with, so he's not likely to accept them anyway. 😉
Between the two, I like BitCoin.Tax over Cointracker.io. Cointracker's head guy is on Twitter and regularly posts some incorrect tax advice. I used Cointracker more last year because the accountant version was free and I could invite clients easier. BitCoin.Tax charges accountants for a profile, but I had a client who went there on her own and just gave me access after-the-fact, and that didn't cost me anything.
Best of luck with however you decide to treat this!
Thank you for the very thorough and detailed response Karl!
I hope you have a happy New Year and a successful Tax Season!
You have clicked a link to a site outside of the Intuit Accountants Community. By clicking "Continue", you will leave the community and be taken to that site instead.