Cryptocurrency Archives

Understanding the Tax Implications of NFTs – Nonfungible Tokens

By Office Staff|2022-06-16T12:14:52-07:00June 16, 2022|Categories: Taxes|Tags: Bitcoin, Blockchain, Cryptocurrency, Ethereum, NFT, Nonfungible Token, OpenSea|0 Comments

Just when you thought that the world of finances couldn’t possibly become any weirder or more complex, somebody comes up with a new idea to challenge our understanding.

When FDR started the process of taking the U.S. dollar off the gold standard in 1933 and Nixon completed the process in 1971, they were unaware of where technology would lead us decades later. They had no clue that they were essentially opening the Pandora’s box of alternative currencies — first with cryptocurrencies like Bitcoin and ETH, and now with Nonfungible Tokens (NFTs).

These and other digital currencies and assets are not only challenging traditional monetary policy across the globe but are also adding another layer of complexity to tax laws and their enforcement. While Bitcoin seeks to replace traditional currencies, some can argue that NFTs — which also rise and fall in value — are seeking to replace physical assets, and therefore are subject to income tax and capital gains taxes.

In this post, we take a deeper dive into what NFTs are and the tax implications surrounding their ownership and use.

What Are NFTs (Nonfungible Tokens)?

Stories about Nonfungible Tokens (NFTs) are everywhere in the news. But what exactly are they?

Nonfungible Tokens (NFTs) are digital assets that represent real-world items, from art and music to articles and sports trading cards. But these aren’t just copies of files found on the internet. NFTs are nonfungible, meaning they’re Continue reading… Continue reading… Continue reading…

Want to Reduce Your Income Tax? Start Planning Now!

By Office Staff|2022-06-02T14:06:42-07:00June 2, 2022|Categories: Taxes|Tags: Bitcoin, Calculating Taxes, Capital Gains, Capital Losses, Cryptocurrency, Estimated Payments, Mid-Year Meeting, Net Investment Income Tax, Reverse Mortgage, Tax Planning, Tax Withholding, Virtual Currency|0 Comments

You probably just filed your 2021 tax return a month ago or so, and you’re ready to put taxes at the back of your mind for at least a few months. This may not be your best thinking because, if you want to pay less in 2022, now’s the time to start planning.

What you do from now until December 31 of this year, can have a significant impact on how much income tax you’ll owe, or the size of the refund you can expect to receive, next year. That’s why here at SWC, we’re encouraging our clients to schedule a Mid-Year Tax Planning Meeting as soon as possible.

In fact, tax planning is becoming increasingly important for two reasons:

First, thanks to inflation and other economic pressures, increases in income aren’t likely to keep pace with inflation. Saving on taxes may help alleviate some of that pain.
Second, if any pieces of current administration’s tax plan are implemented, tax rates for both individual and corporate taxpayers could increase. Having a tax plan in place to account for these potential increases and maximize the deductions and credits for which you qualify, may help to counter some of those increases.

As you prepare for your Mid-Year Meeting with us, we encourage you to start thinking about the various steps you can take now to avoid any nasty surprises next year, including:

Consider adjusting your tax withholding or estimated payments
Get a grip on the timing of investment gains and losses
Take advantage of lower tax rates on investment income
Check your deduction strategy
Be prepared for issues related to virtual currency
Consider if a reverse mortgage is right for you

In this post, we’re going to cover all of the above and more. First up, tax withholding and estimated payments.

Review Your Tax Withholding or Estimated Payments

The U.S. has a pay-as-you-go tax system, meaning that citizens pay taxes as they earn money. Here’s what that means: Continue reading… Continue reading… Continue reading…

Freelancers and Contractors Accepting PayPal, Venmo, and Crypto — What You Need to Know

By Office Staff|2022-01-25T16:18:08-08:00January 25, 2022|Categories: Business Advice, Independent Contractor|Tags: Cryptocurrency, IRS, PayPal, Venmo|0 Comments

We all accept the fact that each new year ushers in new or updated tax rules, regulations, deadlines, rates, and thresholds. However, changes for 2022 are most remarkable because of their impact on freelancers, independent contractors, and any business that accepts payment via an e-payment platform such as PayPal or Venmo.

Top among these changes affecting many of the above-mentioned freelancers, independent contractors, or businesses is the use of hard, soft, cold, hot, mobile, or digital wallets to accept payments available through cryptocurrencies, which are now perhaps stable enough for businesses to consider accepting.

In this post, we give you a heads up on what to expect in 2022 so you won’t be blindsided at any point during the year ahead. Below, we offer insights into each of the following changes for 2022:

New reporting rules for payment apps
What you need to know about accepting cryptocurrencies
Upcoming tax deadlines
Changes to the standard deduction
Marginal tax rates for 2022
Increase in the earned income tax credit

To avoid any unpleasant surprises at year’s end, now is the time to get up to speed on the key changes below and adjust your tax and financial planning accordingly.

New Reporting Rules for Payment Apps

To reduce the amount of unreported taxable income flowing through e-payment platforms such as PayPal, Venmo, and Cash App, the Internal Revenue Service (IRS) is requiring such platforms to report each user’s business transactions if they exceed $600 for the year for goods or services.

The prior threshold for reporting was 200 transactions per year or a combined total of at least Continue reading… Continue reading… Continue reading…

2021 Year-End Tax-planning Tips for Business Owners

By Office Staff|2021-12-08T14:55:45-08:00November 23, 2021|Categories: Taxes|Tags: American Rescue Plan Act, Build Back Better, Business Meals, Business Taxes, Cryptocurrency, Employee Retention Credit, SBA, Work Opportunity Tax Credit|0 Comments

As we covered in “2021 Year-End Tax-Planning Tips for Individuals,” what you do this year can make a big difference in how much you pay in state and federal tax next year. And perhaps more important if you’re a business owner, it can impact your net worth for decades to come.

Because it stands to reason the more you save on taxes, the more money you have to invest in your businesses and your own future.

Paying attention to tax rules and regulations and how they impact your business finances has become especially important in recent years with the flurry of changes in response to the global pandemic and its economic impact, major shifts in government policies (and spending), business slowdowns and shutdowns, and more.

In this environment of disruption and uncertainty, having a well-thought-out tax plan in place enables you to minimize your obligations while using your tax savings to protect and grow your business and personal wealth.

Here at SWC, we encourage business owners to schedule a year-end tax planning and financial strategy session with your CPA. And if you are a business client of ours, you already know that we can help you reassess your business taxes and finances, adjust your plan to optimize outcomes, and take any year-end steps that can save the business money and protect and grow your personal net worth.

In the meantime, whether you’re a client of ours or you work with another firm, here’s a look at some tax issues for business owners to consider as you approach year-end 2021: Continue reading… Continue reading… Continue reading…

2021 Year-End Tax-planning Tips for Individuals

By Office Staff|2021-12-08T14:55:56-08:00November 17, 2021|Categories: Taxes|Tags: American Rescue Plan Act, Child Tax Credits, Cryptocurrency, Plug-in Vehicle Credit, Solar Credit, Telework, Year-end Tax Planning|0 Comments

When it comes to your personal finances, what you do this year will make a big difference in how much state and federal tax you pay next year (on April 15). It could also have an impact on your net worth for decades into the future.

That’s especially true this year when so many factors are likely to have impacted your taxes and finances — the lingering global pandemic, new tax laws, business slowdowns and shutdowns, supply chain disruptions, inflation, major shifts in government policies, and more. In this environment of relative disorder and uncertainty, having a well-thought-out tax plan in place empowers you to successfully meet the challenges, capitalize on new opportunities, and move forward with confidence.

Here at SWC, we encourage you to schedule a year-end tax and financial strategy session with your CPA. And if you are a client of ours, you already know that we can help you reassess your taxes and finances, adjust your plan to optimize outcomes, and take any year-end steps that can save you money and protect and grow your net worth.

In the meantime, whether you’re a client of ours or you work with another firm, here’s a look at some issues to consider as you approach year-end 2021: Continue reading… Continue reading… Continue reading…