Vincenzo Villamena is an American CPA and the Managing Partner ofOnline Taxman, an online CPA firm specializing in taxes for U.S. citizens with a focus on cryptocurrencies and expats. I had a chance to interview him about cryptocurrencies and taxes.
What tax implications are there for 2017 if a person traded cryptocurrency?
Although the public and crypto community refer to Bitcoin and altcoins to as virtual currencies, the IRS treats them as property for tax purposes. Therefore, selling, spending and even exchanging crypto for other tokens all likely have capital gain implications. Likewise, receiving it as compensation or by other means will be ordinary income. Short term capital gains are taxed at your normal ordinary income tax rate vs. long term gains are taxed at a reduced rate (15-23.8% depending on your bracket).
How should a person prepare for 2018 taxes to minimize tax liability?
The best strategy for minimizing tax liability is to buy and hold for over a year. This might ultimately impact ones trading strategy and given the extremely volatility of crypto, it still might be in your best interests to lock in the profit now and take the tax hit, but that is up to you to decide. The other important aspect is to keep good records in order to record these trades as capital gains and ensure there are no shortcomings in records in case of audit. Digital exchanges are not brokers regulated by the IRS, which makes matters more complicated for preparing tax documents if you traded crypto. Exchanges do not issue a 1099 form, nor do they calculate gains or cost basis for the trader
About Vincezo Villamena, Managing Partner of Online Taxman
Vincenzo Villamena has extensive experience in both tax preparation and advising clients in accounting and financial transactions. He has “Big 4” audit and corporate accounting experience during his time with PricewaterhouseCoopers, involved in Fortune 100 audit engagements and M&A transactions, giving him the knowledge to perform analysis in valuation, corporate finance, and technical accounting issues. More recently, Vincenzo has served as partner in 4 Corners Inc., focusing on individuals and businesses for accounting and tax preparation matters as well as advising high net worth individuals in private equity investing.
He has both a Masters of Accounting and Bachelors of Business Administration with distinction from the University of Michigan’s Stephen M Ross School of Business.
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About Online Taxman
Online Taxman specializes in uniqueness and the preparation of US expat taxes for Americans living abroad. Founded in 2010 by Vincenzo Villamena, the company has serviced thousands of US expats living abroad. Each of their tax preparation professionals are Certified Public Accountants and are experts in navigating the intricacies of the expat tax process.
Online Taxman offers completely secure and online tax preparation services including an online document exchange and upload system, and utilization of modern communication technologies such as Skype and Go To Meeting, we they are able to streamline and simplify the process, making your tax preparation painless and from the comfort of your own home.
They offer a free consultation for existing and prospective US expats.
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