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Every time you convert Bitcoin into anything, whether it be goods or services, other cryptocurrencies or even tax payments, it could be a taxable event, depending on local regulations. It's not something crypts think about when they do their daily lives, but potential sanctions can be unpredictable for tax evasion. Node40 is a company that originally started hosting Dash Masternodes for a fee – and they still do – but then realized that their background as programmers could potentially help people in the US blockchain industry accurately assess their tax liabilities to cryptocurrency.
Node40 is one of the few providers in space, having developed what is equivalent to a QuickBooks for token blockchain.
CCN spoke with Perry Woodin and Sean Ryan, the co-founders of the company, recently on the significant increase in demand for their product since Bitcoin exploded last year and many thousands of Americans, potentially millions, entered the cryptocurrency for the first time. According to Sean, there is a painful lack of education among cryptographers regarding their tax responsibilities and weight for the US government.
"If people are making digital currency transactions, it's important that someone understands that there is a tax obligation on their part, whether they pay taxes or if they are daily traders trying to make it big in the cryptic world – it does not matter. Whenever you interact with the digital currency, it is important for people to understand that there is a tax liability. "
The software allows the user to easily integrate with the exchanges and cryptographic portfolios he uses, determines the values exchanged and what must be reported. It simplifies the process for users, who might otherwise find it very difficult to determine which amounts were actually exchanged. Ryan believes that the 1099-K forms that traders will receive from trades in the upcoming fiscal season will be fairly inaccurate, they do not tell the whole story and that his company can help people by allowing them to get a much more detailed picture of their trading history. Perry Woodin said of the forms:
"Many people will receive the 1099-K modules this year from the exchanges they have interacted with and we know that those forms will probably not be accurate, our system will be able to provide a more accurate number and people will probably need it. "
The "fast books of the blockchain world"
Node40 has three levels of product and users who only want the basic service can register for free. Users who need more advanced features can pay $ 750 a year, even if it is currently 50% discounted. They believe that the demand for their product will only increase. Unlike most blockchain industries, they say, tax accounting software is not based on market performance. If Bitcoin goes down, people need it. If the price of Bitcoin goes up, people need it even more.
Sean Ryan said the Nodo40 saw a serious increase this year in the number of accounting professionals and law firms who have received requests from their clients on how to manage cryptocurrency and the government. He said: "While we are not lawyers or accountants, we have developed a product that serves them.What we are seeing is an increase in CPAs and law firms that want to see how we can adapt to their world."
Regarding Ohio tax collectors who accept Bitcoin instead of fiat payment, Ryan said that he actually creates a fiscally federal event for the user, so the user has to consider whether he is saving enough in fees to be paid in that method to offset the obligations that could be created at the federal level. "Ohio does not care," he said, pointing out that in some cases it might be useful to spend criptos that way.
"This is a good year because if I receive Bitcoin from my customers paying my January invoices in Bitcoin, I'm getting it at a very high value, say $ 8,000. Now the price of Bitcoin is falling for the whole 2018, I always less value.Then the cost basis of what I am receiving changes.Every time I receive it, it has a different value.Then at the end of the year, when it comes time to pay taxes, I am using that bitcoin that I have received at all the different cost bases, and Ohio does not matter, but the federal government certainly cares that I'm staying at Bitcoin now. "
In a press release issued after our interview that focuses on how 2018 will be the year when many people report encryption losses to offset their other tax liabilities, co-founder Perry Woodin said:
"It is clear that, with the huge crises in the cryptocurrency markets in 2018, many people are considering whether this is a good opportunity to disclose losses incurred, and they will try to take advantage of these losses to offset other tax liabilities. up to now, not having reported their cryptographic activity, those who have chosen to disclose losses this year will have to report their encrypted positions every year from now on, giving tax authorities better visibility of the cryptic involvement of people ".
One thing is certain: neither the cryptocurrency nor the federal government are leaving early, and the IRS has shown a definite will to adapt to changing times. Ryan and Woodin believe that people will be more willing to pay taxes if they have a simpler way to do it, and that solving the educational gap that intersects taxation and cryptography will help create a fairer and healthier environment for blockchain entrepreneurs to operate inside
Images from Shutterstock
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