What Crypto Tax Accountants Don't Want You to Know About Their Pricing (2024)

What Crypto Tax Accountants Don't Want You to Know About Their Pricing

As much as we'd like to believe that our beloved Bitcoin and Ethereum are floating in a blissful, tax-free nirvana, the harsh reality is otherwise. Cryptocurrencies, despite their ethereal name, are subject to the decidedly unethereal world of tax regulation. And who do we turn to in our hour of need? The high priests of the tax code themselves, the accountants.

But not just any accountants. Oh no, we're dealing with the rare breed of crypto tax accountants – those brave souls willing to dive into the abyss of crypto tax laws, blockchain transaction histories, and regulatory confusion. And for their courage, they charge a pretty penny.

Now, you might be thinking, "Surely it can't be that expensive?" Prepare for a reality check, my friend. According to the good people over at Reddit, a crypto tax accountant may charge in the region of a cool $300-$500 per hour. Yes, per hour. And the total cost for their services? Well, you might want to sit down for this. We're talking about a figure comfortably in the 4-digit range.

Yes, welcome to the world of crypto taxes, where the coins are made up, the regulations are confusing, and the accountants are raking it in. But fear not, for in this article, we're going to uncover what crypto tax accountants don't want you to know about their pricing. Buckle up; it's going to be a wild ride.

1. Demand outstrips supply

Here we are, in the midst of a crypto trading boom, and, as it turns out, dealing with crypto taxes is akin to trying to solve a Rubik's cube while riding a roller coaster in the dark. It's complex, it's confusing, and it's enough to make even the most seasoned trader break out in a cold sweat.

It's simple economics, really: when the going gets tough, the tough get a specialist.

And so what we’re witnessing is a perfect storm of complexity, uncertainty, and a burgeoning new field of finance, all culminating in a surge in demand for these spreadsheet-slinging superstars.

The relative scarcity of crypto tax accountants allows them to command high fees. They are the new rockstars, only with more spreadsheets and fewer guitars.

2. The variety and volume of work are larger than in traditional accounting

Every one of your transactions — each buy, sell, swap, stake, farm — is a breadcrumb that a crypto tax accountant has to follow. And let me tell you; it's not a leisurely stroll in the park. It's more like a trek through the Amazon rainforest, each transaction being a new insect species to identify and catalog.

Consider this: you have your crypto on multiple exchanges, some in software wallets and some in cold storage. There are well-known coins like Bitcoin and Ethereum, and then there are the obscure ones. There are coins that you've bought, coins that you've been gifted, and coins that you've earned through staking. Basically, any time you do anything with crypto (with a few exceptions), it results in a taxable event, which means your accountant could be reviewing thousands of transactions.

It leaves an accountant staring at their screen, wondering how on earth "staking" and "yield farming" became part of their vernacular.

3. The extra work of keeping up with the latest changes

Besides the bigger scope of work, there's also the ambiguity and uncertainty in the crypto tax space, and keeping up with the latest changes and understanding how to apply them correctly takes a considerable amount of expertise and time. This complexity often translates to higher fees.

You're not just paying for someone to fill out forms. You're paying for a navigator, a translator, a guide who can traverse this convoluted landscape and come out on the other side with your tax return intact.

4. The risk premium

Tax laws for traditional financial transactions have been around for a long time, and while they do change, it's usually at a pace that's more tortoise than hare. Not so for the crypto tax accountant. They're like surfers riding the wave of a constantly evolving sea of regulatory guidelines, IRS pronouncements, and court rulings. One misstep, one misinterpretation, and they can wipe out, taking their clients (and potentially their reputations) with them. That's Risk with a capital R.

If an accountant makes an error on a client's tax return, it's not just an "oops, my bad" situation. It could lead to audits, penalties, and interest for their clients, and potential legal and financial repercussions for the accountant themselves.

Crypto tax accountants face risks, and that's also why they charge what they do - for the risk they take, the expertise they offer, and the peace of mind they provide.

5. Oh, you think you can do it on your own?

Venturing into the world of crypto tax filing on your own would be like climbing Everest, only with more forms and fewer Sherpas. This endeavor might seem intrepid, daring even, but let me remind you, even Edmund Hillary had Tenzing Norgay.

It would be unwise to eliminate your accountant altogether, but armed with the right tools, your accountant can ensure your ascent to the summit of crypto tax compliance is as smooth as possible.

That’s where Bitwave comes in, the digital Sherpa for your crypto tax journey. It’s an all-in-one tool designed to help you navigate the labyrinthine world of digital asset accounting. It can track transactions across multiple blockchains, calculate your gains and losses in real time, and even generate tax forms at the click of a button.

Now, Bitwave isn't going to do all the work for you. You still need to know what you're doing, understand your transactions, and keep up with the ever-changing crypto tax landscape. You still need to work with an accountant, but crypto tax software like Bitwave can be a game-changer for an accountant. Perhaps now they don’t need as many hours to complete your taxes?

Take a look at Bitwave today and share it with your accountant.

‍

Cover photo by Shubham Dhage on Unsplash