Hey Friend,
Keeping good records is essential for any tax preparer collaborating with clients who are investing in cryptocurrencies. As with any other client, it’s important to ensure that all relevant documents and information are organized and securely stored. But when it comes to cryptocurrency investments, the IRS is watching! You should take extra precautions so that you’re prepared for any potential tax audits.
Document Everything. Keep copies of all documents sent to you by your clients related to their cryptocurrency investments. This includes any emails, contracts, account statements, or other documents that supply evidence of their investments and transactions. It’s also important to keep records of any conversations that you have with your clients about their investments or taxes, including details of any advice or guidance you give.
Stay Organized. Keep your client files organized. I suggest a filing system based on year. This will make it easier to reference documents quickly and easily when filing taxes for your clients. Additionally, having an organized filing system will help ensure that you don’t miss important documents when preparing taxes for your clients.
Store Securely. Keep your client documents for at least seven years. Three years is the standard recommendation from the IRS for tax records. However, if you claim losses or certain tax credits, seven years is wise and it’s important to adhere to it to be prepared in case of a tax audit.
Back-Up Your Data. Always perform regularly scheduled backups of your data. I suggest creating an automated monthly backup system. Back up your cloud storage, website, and computers with an external hard drive that is stored off-site at a safe location.
Keeping good records is essential to supplying quality service, and it’s something that every tax preparer should take seriously. By following these simple tips, you can ensure that you have all the necessary documents and information on hand to accurately prepare taxes for your cryptocurrency-investing clients.
Recap:
- Documentation – Keep a record of all emails, conversations, and documents.
- Organization – Keep your client files organized and easily accessible.
- Maintenance – Keep client records electronically for 7 years.
Great tax professionals keep great records!
LA🌻🖤
Chief Strategist
