Cryptocurrency is treated as property by the IRS, meaning that transactions involving cryptocurrencies can trigger capital gains taxes, similar to stocks and real estate.
H&R Block utilizes tax preparation software that can account for various forms of cryptocurrency transactions, including trading, sales, and purchases made with digital assets.
Clients at H&R Block can disclose their cryptocurrency holdings and transactions, allowing tax professionals to calculate potential tax liabilities accurately.
The IRS requires taxpayers to report their cryptocurrency activities on their annual tax returns, specifically under the "Other Income" category, which H&R Block is equipped to handle.
As of 2023, IRS Form 8949 is used for reporting capital gains and losses from cryptocurrency transactions, and H&R Block provides guidance on completing this form.
Clients must maintain accurate records of their cryptocurrency transactions, including the date of purchase, cost basis, date of sale, and proceeds, which H&R Block's software can help organize.
Losses from cryptocurrency investments can offset gains from other investments, potentially reducing the overall taxable income, and H&R Block can assist clients in understanding these nuances.
The guidelines for cryptocurrency taxation have evolved, with the IRS emphasizing the need for detailed reporting, which has prompted tax software products like those at H&R Block to improve their cryptocurrency tracking features.
H&R Block offers clients access to tax news and updates regarding cryptocurrency, keeping them informed about potential changes in tax laws that might affect their filings.
Some states have varying tax regulations concerning cryptocurrency, and H&R Block helps clients navigate both federal and state tax requirements.
The Tax Cuts and Jobs Act of 2017 did not directly address cryptocurrency, leaving many aspects of crypto taxation open to interpretation, which H&R Block takes into account when advising clients.
Mining cryptocurrency can be treated as a business activity, which may require additional reporting requirements on tax returns that H&R Block helps clients understand.
Taxpayers who receive cryptocurrency as payment for services must report the fair market value of the currency on the day it was received, a concept well understood by H&R Block tax professionals.
H&R Block must stay updated with the current cryptocurrency regulations by continuously training staff, given the rapid development in both blockchain technology and associated legislation.
In the event of a hard fork in a cryptocurrency, taxpayers may be required to report the fair market value of the newly created coins, which H&R Block can assist with during tax preparation.
Cryptocurrency exchanges often provide Form 1099 for users, detailing their transactions; H&R Block advises clients on how to correctly interpret and report this information.
Individuals can gift cryptocurrencies without triggering taxes up to the annual exclusion limit; H&R Block can guide clients on how to handle gifting crypto from a tax perspective.
Airdropped tokens, which are distributed at no charge, can be subject to taxation, and H&R Block clarifies how to report such income accurately on tax returns.
H&R Block focuses on ensuring compliance with IRS guidelines, advising clients on due diligence to prevent issues with audits related to cryptocurrency transactions.
The increase in cryptocurrency adoption has led H&R Block to develop specialized services aimed at maximizing tax efficiency for clients involved in digital assets.