The cryptocurrency market has seen a meteoric rise in the last couple of years. With this, comes the need for tax-related tools to help you manage your gains and losses. Here are nine of the best tools that will help you keep track of your crypto taxes in 2020.
The best crypto tax software 2021 is a list of 9 tools that are the best in their respective categories.
It’s time to start thinking about taxes again, believe it or not. It’s hard to think we’ve already completed the circle, yet here we are, waiting for our tax papers to arrive so we can file. As bitcoin gains momentum in the market, it attracts greater interest. Unfortunately, governments are paying notice, so they decided to intervene.
Cryptocurrency and cryptocurrency markets have piqued the attention of governments. As a consequence, we’ve witnessed a rise in the number of efforts and procedures aimed at appropriately taxing cryptocurrencies and their owners. Of course, this has led to the development of cryptocurrency tax software.
Although cryptocurrency taxes and regulations are still in their infancy, this does not prevent financial authorities from calculating and allocating a tax bracket to digital currencies. Cryptocurrencies are now classified as abstract properties, which places them in that category until their owners file their taxes. Unless you’re a CPA, it’s impossible to comprehend the intricacies. And, as this tutorial from CPAExamGuy demonstrates, this isn’t a simple procedure.
Get Ahead of the Game When It Comes to Regulations
Because not all cryptocurrencies have a public entity or individual attached to them, the IRS and other regulating financial organizations have a difficult time determining who should pay those taxes. The IRS estimates that between 2013 and 2015, less than a thousand Americans reported bitcoin on their tax returns each year.
Even lately, we’ve seen well-known exchanges like Coinbase provide over personal information about particular bitcoin addresses to governments. Governments are exerting pressure on these exchanges, which has resulted in this. While this may temporarily satisfy governments, cryptocurrency tax regulation is just a matter of time until it strikes crypto investors hard.
As a result, many experts advise that reporting cryptocurrency now is the best way to prevent future fines or penalties. As a result, numerous online programs have been created to assist individuals in doing their bitcoin taxes. We’ve discovered a few that should come in handy during tax season. These are the finest bitcoin tax software options on the market, in our opinion.
Please remember that the contents of this post are just suggestions and should not be construed as accounting, tax, legal, or financial advice.
CryptoTrader.Tax is the number one cryptocurrency trader in the world.
Some bitcoin tax websites purposefully make completing your cryptocurrency taxes as difficult as possible. With CryptoTrader.tax, this is not the case. You can have your crypto taxes done in “the simplest and most trustworthy manner” with CryptoTrader.tax.
To begin with, the platform allows for a broad range of exchanges. It may be difficult to keep track of and calculate your profits and losses throughout the year. That’s why CryptoTrader.tax has gone to great efforts to connect with some of the most prominent cryptocurrency exchanges available.
CryptoTrader.tax enables you to import your transactions from over 35 different exchanges, making the procedure easy and painless.
The software is packed with features that make it ideal for anybody looking for a simple method to handle their bitcoin taxes. After you’ve imported all of your data and reviewed your transactions, for example, you may automate the reports you’ll need to pay your taxes correctly.
Cryptocurrency. A Cryptocurrency Income Report, an IRS Form 8949, a Short & Long Term Sales Report, an Audit Trail Report, and other reports will be generated by tax. These reports may be downloaded and imported into software such as TaxAct or TurboTax, or sent to your accountant or CPA.
Furthermore, CryptoTrader.tax calculates your taxes using the same methods as tax experts. Because the platform supports FIFO, LIFO, and HIFO, you may use CryptoTrader.tax to file your bitcoin taxes no matter where you are.
CryptoTrader.tax also provides you a clear picture of your tax obligations depending on your bitcoin profits and losses. You can help minimize any capital gains you experienced during the year by using its built-in tax-loss tools.
For each tax season, CryptoTrader.tax provides a range of pricing options, beginning at $49. You can discover the precise package that fits for you and your bitcoin tax requirements thanks to a tiered pricing system. Whether you’re a beginner or a seasoned trader, CryptoTrader.tax has a strategy to suit your needs.
If you’re searching for a cryptocurrency tax solution that makes managing and calculating your taxes simple, CryptoTrader.tax is a good option. They’ll take away a lot of the tension and worry about taxes by assisting you in obtaining an accurate, dependable, and compliant crypto tax report.
Koinly is a bitcoin accounting and tax software that does it all. It has a user-friendly interface and provides tax reports for the United States, Australia, Canada, Sweden, Norway, Germany, Switzerland, and approximately 20 more countries. While many tax software packages claim to cover hundreds of countries, they typically just provide you with a generic file containing a list of your capital gains, which you must subsequently parse and convert into the format required by your tax agency. Koinly really creates reports that may be sent directly to tax authorities, such as the Form 8949 and Schedule D in pdf format for the United States, a K4 for Sweden, and an Rf1159 for Norway, and so on.
Koinly also has API connections with all major exchanges and blockchains, allowing you to instantly sync your complete transaction history. It stands out since it also enables you to keep track of your whole crypto portfolio and observe how it has grown over time using sophisticated and attractive graphics. While there are other portfolio monitoring solutions available, Koinly stands out by providing a platform that is tailored to investors who want to minimize and track their taxes.
Koinly now supports 333 exchanges, 69 wallets, and over 6k coins, comfortably putting it in the lead in terms of the most platforms supported. Koinly even has an in-built blockexplorer that allows you to monitor transactions across several blockchains in one location — a useful tool if you often switch between blockexplorers.
Koinly, like BearTax, features a clever matching method that will automatically match transactions between your exchange accounts and wallets. Additionally, Koinly has a better error management system that will alert you if it finds inconsistencies in your data or if your tax report may not be correct. Some exchanges, like as Bitfinex, may have ‘gaps’ in their transaction history, thus knowing that there is a problem is helpful so you can manually correct it rather than producing an incorrect tax return. They also provide free cryptocurrency tax guidelines to assist you.
Koinly is free to use for limitless transactions at first, but you must pay to get tax forms. Prices begin at $79 for 300 transactions and rise as volume increases. It’s worth noting that competing systems often charge per tax report, while Koinly just costs per year. So, if you want to make changes to your previous tax returns as well, Koinly will undoubtedly be the most cost-effective choice.
Koinly is a fantastic tool for anybody who wishes to keep track of their taxes and produce tax reports instantly when the time comes.
Look no farther than BearTax if you’re searching for a straightforward method to figure out those tricky crypto taxes. You can import all of your crypto transactions from over 25 exchanges with this platform. The site will calculate your profits and provide you with the paperwork you’ll need to submit your taxes.
On the BearTax platform, you’ll find a number of helpful features. To begin with, the site is simple to use and browse. The “smart matching” feature will match deposits and withdrawals from supported exchanges and provide them to you in an easy-to-read manner. This kind of function is beneficial since it allows you to avoid negative balances, which may affect the accuracy of your tax return.
BearTax’s gain/loss function also makes it simple to view your tax obligations depending on each cryptocurrency. You have a clear picture of when you bought, sold, or exchanged any digital assets, as well as the tax obligations associated with them.
The platform also supports both decentralized and centralized sites. This reduces the difficulty of trading on decentralized exchanges, which is frequently the case. You may also import a.csv file if BearTax doesn’t offer a method to connect with a certain exchange.
BearTax has a variety of price choices for people who don’t want to spend a lot of money on their crypto taxes. You can download the paperwork you need, see your gain loss summary, get chat assistance, and have support for an infinite number of swaps whether you select the $0.99 or $199 plan.
The amount of transactions supported is the most significant difference between the programs. The lower subscription only allows for 20 users, whereas the higher package allows for an infinite number of users. The papers you download are the only item for which you will be charged. All calculations are free.
When it comes to preparing your digital currency taxes, BearTax is a great tool.
TaxBit is another good choice if you’re searching for bitcoin tax software. This market-leading bitcoin tax software was created by some of the finest cryptocurrency tax lawyers and blockchain CPAs in the industry.
You may connect to over a hundred different exchanges with TaxBit, making it simple to integrate and export your data to your chosen tax software. You may also construct an IRS 8949 tax form for your cryptocurrency and manage your own portfolio.
Taxbit also allows you to monitor your portfolio throughout the year. TaxBit allows you to see real-time analytics while you purchase, sell, and trade your favorite digital currencies, rather than just generating a tax form when it’s time to do taxes. You can consolidate your transactions in one location, examine past performance, and prioritize deals to reduce tax losses with the Taxbit program.
TaxBit offers over 4,000 different fiat currencies, commodities, stocks, and cryptocurrencies, in addition to collaborating with some of the industry’s most well-known exchanges. You may configure your account so that your exchange data is fed into TaxBit’s engine automatically.
You can be confident that the accuracy of your taxes is in excellent hands with a system built to handle millions of transactions. TaxBit removes all of the ambiguity and complexity around cryptocurrency taxes by concentrating on even the tiniest aspects. That means you can trade your favorite cryptocurrencies without having to worry about paying taxes.
Users also get to use an interface that was created by some of the industry’s best lawyers and accountants. You won’t encounter a lot of technical language or complex terminology when you import your tax information since it is straightforward and simple to use. Furthermore, connecting to an API using TaxBit’s software takes less than a minute, allowing you to concentrate on other essential activities.
TaxBit offers a package for you, no matter how little or how much you trade cryptocurrency. You’ll only have to pay $50 for your current-year tax forms if you choose the basic plan. With TaxBit’s $175 option, you’ll receive five years’ worth of tax forms, as well as limitless exchanges and wallets. TaxBit’s top-tier service costs $500 and covers all tax forms from the last five years, limitless exchanges and wallets, as well as a CPA evaluation.
TaxBit offers an immutable audit trail and account summary that your CPA can readily examine, even if you choose to employ your own tax expert. If all of these benefits aren’t enough to persuade you that TaxBit is the way to go, remember that it is funded by Winklevoss Capital and Peter Thiel’s Valar Ventures, two of the most well-known VCs in the crypto and Fintech industries.
If you’re having trouble keeping track of your crypto portfolio and then providing the required paperwork when it’s tax time, Accointing is a good alternative. This solution is excellent for assisting you with both of these tasks.
Crypto management is simplified using Accointing. Its portfolio monitoring tool provides automatic updates, ensuring that you are constantly up to current on the status of your assets. You’ll receive a portfolio management tool that shows you the performance of your existing assets in real time, as well as the ability to generate and print tax reports.
You can connect to several of the most prominent exchanges, including Binance, Coinbase, Kraken, KuCoin, and BitMex, and the solution supports over 4500 currencies. Furthermore, Accointing’s built-in APIs allow you to connect directly to your preferred exchange.
Accointing offers three different price choices, but you should know that their monitoring service is completely free. You’ll have to pay for tax assistance, but the site offers a free method to monitor your portfolio.
You can receive your complete report and up to 250 transactions for $49.99. You’ll have to pay $129.99 for the next level, but you’ll receive your complete report as well as up to 5,000 transactions. The top tier of Accointing costs $259.99, but you receive a complete report, an extended holding period, and unlimited transactions. Unlimited imports, portfolio management, and reports from prior years are included in all packages.
Accointing can also keep track of wallet transactions, including as payments, airdrops, and revenue, so you never have to wonder what occurred when. You may easily import it into the platform through auto-import. If you choose not to utilize that approach, Accointing allows customers to manually enter transactions via their desktop or mobile applications.
Accointing provides a user-friendly platform that makes things simple and clear. Users may also contact Accointing’s customer service department, which offers response times of no more than 8 hours, as well as assistance through Telegram and Freshchat.
The Accointing app is available for iOS and Android, as well as a desktop version for those who prefer to work on a computer or laptop.
Accointing provides all of its customers with a bitcoin tax solution that can be used in a matter of seconds. Examine your transactions, categorize them using the Accointing platform, and get your tax return as a CSV or PDF file.
It’s straightforward, practical, and cost-effective. What more might a bitcoin tax solution provide?
CoinTracking is #6.
Many people believe CoinTracking to be the finest bitcoin tax software available. When you use the CoinTracking software, you’ll get a clear picture of your bitcoin investment portfolio. You can figure out how well you’re diversified and how much money you’ve earned over the course of the year.
You may link your different exchange accounts to CoinTracking’s web-based solution by utilizing their APIs or a CSV. CoinTracking can examine your trading history throughout the year and calculate your losses or gains for the calendar year using these choices. The final estimates may be exported to XML, Excel, PDF, CSV, or JSON formats.
Throughout the year, the site will scan all of your transactions. You’ll be able to view every transaction you’ve made, as well as the items you’ve given and received. CoinTacking displays both the history and current coin values of your transactions, alleviating much of the agony of having to manually locate that information.
Support Options for CoinTracking
CoinTracking’s software supports over 5,000 different currencies and can get data from up to 25 different exchanges. This makes it a valuable asset for anybody who has traded bitcoin on a variety of sites over the course of the year. It’s also useful if you’re trading in several coins.
You may sign up for a free account on CoinTracker’s website if you wish to utilize it. Of course, the free edition has restrictions in terms of features and transaction volume. The premium version provides you 365 days of use as well as all of CoinTracker’s features.
As a result, if you buy the CoinTracker service in March 2019, you will be able to compute your taxes for 2019, but not for anything you spend or earn until March 2020. A Capital Gains Report is included in CoinTracker’s complete solution. This is accomplished via the use of LOFO, HIFO, FIFO, or LIFO computations.
CoinTracker provides its users with a referral link that allows them to encourage friends and family to join the site. You may get a discount on future purchases if you successfully recruit someone else. The CoinTracker solution is a bit more expensive than other options. Users, on the other side, pay a premium for the capacity to manage more cryptocurrency. If you’re a seasoned trader who works across several platforms, CoinTracker is a viable option.
#7 Taxes on Bitcoin
The web-based BitcoinTaxes platform is one of the most popular bitcoin solutions available. Since its inception in 2014, BitcoinTaxes has provided great tools for computing your annual bitcoin taxes. BitcoinTaxes users will be able to create tax returns that contain information of their bitcoin transactions throughout the course of the year.
Transactions from supported exchanges including Bitstamp, Gemini, Coinbase, and other commonly used trading platforms are included in these reports. Users may also add any contributions or expenditures from their own cryptocurrency wallets to the site. Furthermore, BitcoinTaxes allows you to import any mined coins or revenue earned during the year.
Features of BitcoinTaxes
Once you’ve entered all of your information, BitcoinTaxes will compute your taxes as well as the following:
- A report on donations that includes information on tips and presents.
- A statement of earnings that details the worth of every bitcoin you mined.
- Report on capital gains and losses, as well as the cost of each transaction.
- A year-end report that shows your yearly net profit or loss, as well as your cost base for the next tax year.
Once you have all of your reports, you may enter your capital gains into your preferred tax software or print it off and attach it to your tax form. You may choose your favorite accounting technique using BitcoinTaxes. FIFO, LIFO, compare like-kind techniques, and average costs are all options. Because there is now no formal standard for accounting that relates to the taxes of digital currency, the platform covers this.
Please keep in mind that when you buy BitcoinTaxes software, it only applies to one tax year. One disadvantage of utilizing the BitcoinTaxes platform is that you must manually input the coin price for a particular time period. When a result, as you input your cryptocurrency information, you can expect to do more effort.
Individuals and dealers may see price ranges on the site. However, you won’t know the actual cost unless you sign up for a free account. Residents of Australia, Canada, Germany, the United Kingdom, and the United States may use BitcoinTaxes right now.
#8 Tax Calculator on Coinbase
Coinbase is one of the world’s biggest exchanges, therefore we included it on our list. Coinbase provided tax calculator tools last year to encourage Coinbase users to submit their taxes. These resources are intended to assist tax professionals and individuals in preparing bitcoin tax returns.
Using the Coinbase tax tool, you may create a report that details all of your Coinbase account’s purchases, sales, and exchanges. Please keep in mind that a payment reversal would not be included in your report.
This report provides a cost basis from which you or a tax expert may calculate your investment profits and losses. After that, you may use Coinbase’s calculator or your own external calculator to execute the produced report.
Coinbase is quick to remind out that the IRS has not established a standard for calculating taxes based on digital currency. The platform suggests that you utilize SpecID or FIFO, which are two of the most popular methods. It’s a good idea to talk to a tax expert about the best approach for you.
The FIFO technique is used by Coinbase’s calculator to give a high-level picture of your profits and losses over the year. The Coinbase tool is ideal for individuals who often purchase, sell, or trade on the exchange. This approach, however, has certain disadvantages.
The Coinbase calculation tool does not take into account:
- Cryptocurrencies transferred or received from a wallet that isn’t on Coinbase
- Received or transmitted digital assets from another exchange
- Buying or selling cryptocurrencies on a separate exchange
- Information about Initial Coin Offerings
- Cryptocurrency storage on the outside (i.e., Ledger, Trezor, etc.)
Take a look at ZenLedger if you’re searching for a quick and easy method to compute your digital currency taxes. The platform is linked to all of the main cryptocurrency exchanges and supports the overwhelming majority of fiat and crypto currencies.
Your transaction history from different exchanges is imported into the ZenLedger interface. The software then fills in your tax papers and information for you automatically. Your income reports, closure reports, contribution reports, and capital gain reports are all included in these papers. You’ll also get a profit and loss statement that you or your accountant may utilize.
Any document you generate with ZenLedger is IRS-compliant. As a result, you may use them in combination with your other tax return software without difficulty. The beauty of ZenLedger is that it can be used by anybody. It’s a simple site to use whether you’re a casual buyer and seller or a professional miner.
ZenLedger has three different price levels, depending on your needs. The less costly plans provide basic documentation and assistance, while the more expensive options allow you to provide access to your tax expert. In any case, ZenLedger keeps everything running smoothly with a simple and intuitive user interface.
Taxes are a chore that no one likes (well at least no one I know). Fortunately, there are options for making things more pleasant and less stressful when it’s time to do them. While the laws and standards governing cryptocurrencies are always changing and adapting, it’s critical that you stay ahead of the game to prevent potential penalties and fines.
Using one of the above alternatives will give you a jump start on making sure you’re reporting all of the required information on your taxes, because let’s face it, the government isn’t going away anytime soon. Keeping track of your digital currency tax information may be difficult, so seek expert assistance if you’re uncertain.
DISCLAIMER: The activity of the cryptoassets discussed in this paper is uncontrolled. This post is not intended to provide financial advice. Always do independent research.
The cryptotrader tax is a tool that allows the user to calculate their taxable cryptocurrency gains and losses. It also provides information on how much they can deduct for expenses.
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