Friday, April 20, 2018

Tracking Cryptocurrency Transactions for Tax Compliance

I was surprised to see today a survey result that 46% of cryptocurrency traders don't plan to report the transactions for income tax purposes (TeamBlind survey - see 4/17/18 article in The Wealth Advisor). There is, of course, no reason for not reporting income. The IRS is well aware that people have virtual currency transactions. It is also an agenda item for the Criminal Investigation Division of the IRS per their 2017 annual report.

To help track crypto transactions, there are a few software tools readily available.  A recent entry to this market is CryptoTrader.Tax.  Here is information from their recent press release (with permission of the company):

"CryptoTrader.Tax released a web-based tool developed with the intention of helping users calculate the capital gains and losses associated with their cryptocurrency investment endeavors. The tool is currently in the ‘beta’ phase of development, and can be accessed from their website at, www.CryptoTrader.Tax. CryptoTrader.Tax aims to provide its users with an easy and accurate tool to use when it comes time to do their taxes. It properly considers the user’s set time zone, trades across all exchanges, and the sale of their uploaded cryptocurrency income.

CryptoTrader.Tax uses a safe, streamlined workflow to gather the data needed to accurately calculate gains and losses. Users upload trade data via exported .csv files from supported exchanges or manually using the provided template. They can also upload several types of cryptocurrency income, such as mining, gifts, etc. The tool then generates detailed reports using the uploaded information. User’s can view an IRS 8949-esque form showing gains and losses for each sell of a coin or view a detailed breakdown of each sell with even more information. There are also views for income items and coins still being held at the end of the year. Future updates planned for the tool include: population of IRS forms, automatic trade importing from a wide variety of exchanges, and more."

You can find a few others out there as well. What is important is to check these out and use one. 

What do you think?


Special circumstances give some taxpayers more filing time

Thursday, April 19, 2018

3 Easy Ways To Destress After Tax Season

The tax deadline may be in the past but we all know there’s still work to do. The good news is that the influx of people who need things last minute is on a downturn and the end of the season is in sight! At this point of the year, we generally encourage tax pros and business owners to keep up the momentum. Don’t just throw your hands in the air and declare it the end. Before you take a break, while tax season is still fresh in your mind, you should do the following:tax-season-stress-relief

Once you’ve worked through those tasks to close out the season, we encourage you to do more than just going out for a beer or a nice meal. Make changes to your routine to ensure that you completely decompress from the season so that you can come back refreshed and ready to generate revenue during the off season. Here are 3 easy ways to destress after tax season.

Take some time off

For many of us, going on vacation seems like a pretty foreign concept. After all, with how stringent our demanding schedules can be, it seems like the most obvious option would be to forego any break or time-off and grind through. A vacation is a healthy change of pace that will make you more productive in the long-run. After all, that overworked brain of yours truly needs a break. 

Getting out of town on a trip is ideal but you could also take a staycation at home. Catch up on some much-needed couch therapy or get out there and reacquaint yourself with the city you haven’t seen since January. You could also spend some time catching up with friends and family – who probably haven’t seen you in a while.

The overarching goal is to get yourself in a place where you’re completely relaxed and ready to re-approach work with a fresh mind.

Embrace a healthier routine

After you’ve taken some time away, start looking for ways you can adapt to a healthier routine – one that lends more to dealing with stress in your day-to-day. A healthy routine doesn’t necessarily mean going on a strict diet or starting a new exercise routine. It means being mindful about bad habits you may have picked up while trying to get through tax season. 

While most of us know that diet and exercise can be a great deterrent of stress, the hardest part is implementing these practices on a daily basis. As noted by the ADAA, only 14 percent of people exercise regularly to cope with stress. Coping with stress through exercise doesn’t have to mean hitting the gym or going for a run. Just going for a walk on your lunch break or riding your bike to work can help tremendously. Additionally, be mindful of your intake of high-fat foods and sugar. According to PCRM, high fat foods and sugar add to your stress load

The best way to approach improving diet and exercise is to take it one day at a time. As silly as that sounds, it’s how habits are formed. 

Make Adjustments to your work routine

Finally, make some adjustments to your work routine to avoid burnout. This can include adjusting your hours and changing up your processes to optimize your output. For example, if you’re someone who has a lot of energy in the morning but tends to slow down in the afternoon, scheduling all your appointments and calls for the evening enables you to have an entire chunk of time to be productive. Fine-tuning your routine and evaluating your productivity levels will only help when things get busy again.

Keep on keeping on tax pros! We hope you can use these tips to relax, reset, and get back to work.



Missouri shoppers say show me sales tax free items

Wednesday, April 18, 2018

Your tax e-file and, if necessary, e-payment options

E-file your taxes_photo by Kay Bell

The Internal Revenue Service had issues with some of its online systems on Tuesday, April 17, the day that was supposed to be the filing deadline for our 2017 tax returns.

Those problems notwithstanding, e-fling and electronically paying any tax that's due today, Wednesday, April 18 — yes, today, the new filing deadline provided by the IRS to make up for its online inconveniences yesterday — is still the best move for many filers.

The agency for years has been encouraging, and in some cases forcing, electronic filing and paying of taxes. The reasons are that it's easier (definitely for the IRS, which has to process more than 140 million forms each year) and more accurate than going the old fashioned paper route.

Most taxpayers agree. Through the first week of April this year, the IRS reported that 92.3 percent of filers, or almost 96 million, had e-filed their 2017 tax returns.

If you want to join them, there's still time. Here are your options.

E-filing choices: Tax e-filing actually covers two things, using software to prepare your 1040 and associated schedules and forms and then submitting that tax package electronically.

Nowadays you can choose from many different tax preparation software products. Or you can use a tax preparer who is an IRS authorized e-file provider who has selected his/her own tax prep and filing software.

E-File Options for Individuals excerpt
Click image to go to the e-filing overview page for links to other services. 

Picking the perfect tax software: If you're a do-it-yourself kind of taxpayer, the tax software options might seem a bit overwhelming.

After all, you can use the software's online version or buy a program to download to your computer or take advantage of a partner tax filing offer from your bank or broker or use the IRS' Free File.

It's the tax version of option overload when you try to pick a tube of toothpaste at the grocery store!

Take a breath. Now check out NerdWallet's Guide to Choosing Tax Software, as well as my piece on getting the most from your tax software

Transition tasks: If you're new to tax software, converting from your paper filing will take some work. You typically have to enter a lot of the info from the printed forms into your software.

In some cases, the software is able to locate your data if your employer and other payers, such as investment companies, have partnered with the tax program manufacturers.

The good news, though, is that once that's data entry is done, the next year your software will find the prior filing's data and enter whatever is the same into your new e-forms. That way if your taxes are substantially similar, you're ready to go more quickly.

But I digress. Or is it progress, since I was talking about 2018 tax filing due in 2019? Either way, back to this year's e-filing.

Free File choices: The IRS doesn't endorse any particular tax software, but you can get a look at those who meet its filing standards by checking out the companies that are participating in Free File. Most also offer paid versions of their Free File software if you don't qualify to use the no-cost online option.

If you are, however, eligible for Free File — that's folks, regardless of filing status, whose adjusted gross income is $66,000 or less — consider using it. Or some other free option, either through the software companies or, as mentioned earlier, via a special deal with your bank or other financial account.

Taxes are pain enough. If you can do them without shelling out more of your hard-earned (and taxable) money, then great.

E-filing details: With tax software, as with old-school paper filing, you still have to sign your tax return (that means both spouses if you're filing jointly).

You do so in e-filing by using a Self-Select PIN or by entering your prior-year adjusted gross income. Generally, the tax software will automatically enter the information for returning customers. If you're new to the process, you may have to enter the information yourself.

As for the actual submission of your return to the IRS, most software companies offer at least one free federal e-filing.

State return e-file options: State taxes, however, tend to be a different, and more expensive, deal. If state returns are important to you, and they are for folks in 43 states and the District of Columbia, then you need to check your software for that option.

Most states, though, offer their own version of Free File for residents.

Since I live in Texas and don't have to worry about filing state returns, I'm not sure how easy these options or if you have to re-enter a lot of stuff that you put into your federal tax software program.

But a check with your state tax department should provide you the details.

And again, free! So a little extra data entry is probably worth it.

Electronic refunds, too: Finally, if your e-filed federal tax return produces a refund, the IRS suggests you have that money directly deposited into your bank account. It's much quicker than asking for a paper check to be snail mailed to you.

Or, if you must also pay estimated taxes on Tax Day and three other times a year, you can have all or some of your refund credited toward your those 2018 payments.

E-payment options: OK, let's get real. Most of us who file as late in the tax season as possible do so because we owe Uncle Sam.

That's a bummer, but at least we can pay electronically, too.

Taxpayers who owe taxes can now choose among several quick and easy electronic payment options, including the following:

  • Electronic Funds Withdrawal (EFW) allows taxpayers to e-file and pay from their bank account when using tax preparation software or a tax professional. EFW is only available when electronically filing a tax return.
  • Direct Pay is a free online tool allows taxpayers to securely pay their taxes directly from checking or savings accounts without any fees or preregistration. Taxpayers can schedule payments up to 30 days in advance. Those using the tool will receive instant confirmation when they submit their payment.
  • Credit or debit card tax payments are available online, by phone or with their mobile device through any of the authorized debit and credit card processors. Note, however, that you will pay a fee to the card processor, not the IRS. The IRS has a special Web page with details about and links to IRS-authorized card processors.

IRS credit and debit card payment options graphic

  • IRS2Go is the tax agency's mobile app. It's free and offers the option to make a payment with Direct Pay for free or by debit or credit card through an approved payment processor for a fee. You can download IRS2Go from Google Play, the Apple App Store or the Amazon App Store.
  • Electronic Federal Tax Payment System, or EFTPS, is a free payment portal, but you must be enrolled beforehand. It's too late for this coming April deadline, but check it out for future filings, including paying of your estimated taxes.
  • Cash payments can be made using the PayNearMe option. Payments in actual dollars are limited to $1,000 per day; a $3.99 fee applies to each payment. The cash tax payment option is offered in cooperation with Official Payments and participating 7-Eleven stores in 34 states. You can get more details, including answers to frequently asked questions, are at's special cash Web page.

Electronically ask for more time: Just can't make the April 18 deadline? Then ask electronically ask for an extension to file.

You can do so by filing Form 4868 via your software, your tax preparer or Free File, including Free File Fillable Forms.

You also can get an extension without filing Form 4868. Simply use Direct Pay, EFTPS or a credit or debit card (see details above) to e-pay all or part of any tax you've guestimated you owe and indicate that the payment is for an extension.

Although you don’t have to file a separate extension form if you use this e-pay option, you will receive a confirmation number of filing for an extension for your records.

And remember, as the discussion about e-paying indicates, an extension is just extra time to fill out and submit your forms. It's not an extension to pay any tax you may owe. Not paying will cost you more in late-payment penalties and interst.

More tax questions on this last (we hope) day of the 2018 tax-filing season? Check out the Daily Tax Tips.

You also might find these items of interest:



Tax Day pushed to April 18 due to IRS system problems