Crypto Taxation with Laura Walter AKA Crypto Tax Girl

Laura shifted into the crypto-tax space when she realized there was a lack of guidance. [00:45]

Laura: I got my undergrad in accounting and a masters in tax and I was working in public accounting for a while. Once those long hours just kind of got too much for me, I took a little bit of a break and unexpectedly started doing crypto taxes for family and friends. I realized there actually was a bigger need outside of my family and friends. So now I help people all over the US with their crypto taxes.

Using a crypto tax software is a wise move, but it’s a good idea to utilize a CPA who knows their stuff as well. [05:47]

Laura: Being in control of your own crypto taxes, getting more “in the weeds”, and getting involved in the calculations can give you more knowledge, set you up to have a better understanding of where you stand, and help realize how different trades that you make can trigger gains or losses.

I have over 800 clients and so I’ve seen like everything under the sun, there’s nothing that people bring to me that I haven’t seen before or dealt with.

A lack of official guidance is not an excuse to ignore your crypto tax obligations. [17:17]

Laura: Anytime you trade and anytime you sell, anytime you spend that property, it’s very clear how it needs to be taxed and needs to be reported as a capital gain or loss.There’s no arguing with that. Maybe you have some flexibility as to how you want to treat your forks or your airdrops –  I think you have a little bit of leeway there to do that because there isn’t any specific guidance. But where there is specific guidance, there isn’t any leeway.

You need to follow the tax law that we’ve been given. In order to avoid a headache down the road as well as high interest and high penalties if you were ever audited, reporting everything correctly now will totally save you down the road.

New official guidance may be coming soon – and hopefully it will provide more details for common crypto events, like forks and airdrops. [19:25]

Laura: There’s definitely a lot that’s lacking. Even if we think back to 2014 versus now, crypto has evolved a ton and it’s only going to keep evolving. And so there are definitely a lot of holes and there’s guidance that we need. Some things like I already mentioned forks and airdrops, but specifically what we need is figuring out how to assign a cost basis to those because there’s two different arguments there – zero cost basis and fair market value.

Choosing a zero cost basis or fair market value for your fork or airdrop often yields the same taxes – unless you are holding the coin for over a year, or a high-value coin drops significantly in price. [24:20]

Laura: The only times it would be different is if you hold onto that airdropped coin for more than a year because it would be taxed at the long term rate. Or when you can only deduct $3,000 but still have to recognize the income.

Laura shares some tips that will make your life easier as a crypto-trader. [30:42]

Laura: Number one, this is so simple, but honestly, it’ll change your life if you do it. Make sure that you regularly, maybe monthly, quarterly, or even annually go through all your exchanges and wallets and export your trading files (e.g., CSVs) to download of all of your data.

Make sure you include everything and if you’re getting errors using a tax software, it means you’re missing something. Even though you may think you have everything, you’re missing something still. You need to do a reconciliation of your data.
Take a look at your stuff before the end of the year and see if there’s anything you can do from a tax planning perspective to reduce your tax liability. Unrealized losses can’t be claimed – you can realize those losses by selling your coins and then you can rebuy them right after.

There are a lot of crypto-tax softwares out there – Laura is releasing a review of services to help consumers choose which one is right for them. [40:55]

Laura: I think when it comes to choosing a tax software, what you need to do is think about what is most important to you. One thing about BitcoinTaxes that I really like is the price. I also like that you can change your accounting method year to year and BitcoinTaxes will automatically calculate that correctly for you.

If you want to reach out to Laura, you can contact her via email or shoot her a DM on Twitter. [47:22]

Laura: Twitter – you can always find me there. I’m always tweeting: @cryptotaxgirl.

I get so many DMs, so it’s hard to go through all of those. If you really want to get in touch with me, the best way is probably via email: [email protected]. Or you can go to my website, cryptotaxgirl.com.

Basically just “Crypto Tax Girl” everywhere!