Ernst & Young LLP has launched a Tax Calculator Solution to handle the surge in tax audits that targets individuals trading in cryptocurrency.
The move aims to resolve the tax conundrum since it processes a variety of tax filing formats that the IRS often requires. As a solution, the latest addition to the EY Blockchain Analyzer product suite, which automatically computes capital gains for various cryptocurrency transactions.
Ernst & Young to Streamline Crypto-Tax Process
While the outlook for crypto investments is still in its initial stages, its potential is governing the world’s leading accounting firms to explore ways to implement emerging technology in the industry.
The reporting obligations for cryptocurrency in the US continue to change at a lightning pace, lacking clear guidelines from the regulatory authorities.
The Internal Revenue Service has added a question to the standard 1040 form which is America’s primary income tax form. The compliance measures come in the form of a checkbox asking taxpayers to disclose their trade-in cryptocurrencies in 2020.
Michael Meisler, EY Americas Cryptocurrency Tax Center of Excellence Leader said, “The Tax Calculator addresses evolving needs as the crypto landscape continues to build momentum, making the effective management of crypto taxes essential. Individuals can use the Tax Calculator to streamline and automate their crypto tax processes in one centralized location.”
The IRS Connection of EY
The EY Tax Calculator addresses the needs of cryptocurrency traders in the tax season. The accounting professionals are provided with the sources needed to reconcile cryptocurrency balance and transactions for the crypto-transacting clients
Numerous reports emerging from tax authorities fastening down and going after crypto-traders are under-reporting their cryptocurrency profits. The IRS also sent letters to taxpayers who didn’t report actual income and pay yet in the resulting tax from cryptocurrency transactions.
IRS still counts crypto assets as property rather than currency, for income tax purposes. This means the authority will carry on to tax crypto profits and losses like those for stocks, at capital gains rates.
Paul Brody, EY Global Blockchain Leader says,
“Looking ahead in 2021, EY teams will continue to explore expanding the Tax Calculator beyond the US, providing individuals with a centralized management technology to simplify the challenges associated with the crypto tax. Developing an expanding set of tax capabilities to support both individuals and enterprises is a key component of the EY strategy to assist clients with business transactions, including cryptocurrency activities on enterprise blockchains.”