Cryptocurrency is among the most sought-after trading avenues at the moment. Look at this:
Bitcoin has grown by more than 4000% over the past five years. At the same time, Ether shot up a staggering 25000 percent!
Cryptocurrencies ride a massive trend that investors do not want to skip.
However, talk about crypto tax, and people begin looking around
Some people believe that crypto gains aren’t tax deductible since cryptocurrency isn’t currently legalized in the nation.
They could be completely incorrect.
Almost every time, purchasing, selling, or trading cryptocurrency can be considered tax-deductible events. This is true even if your state has yet to legitimize cryptocurrency.
While you could make enormous gains (and losses) through cryptocurrency, you must pay your taxes promptly and comply with the tax laws.
Since we’re not all professional accountants with degrees, these best crypto tax software can prove useful. This will allow you to concentrate on trading and avoid not accurately calculating your crypto taxes.
So, let’s search for the top digital tax software.
A List Of The Best Crypto Tax Software Solutions
Here is a listing of the best tax-filing software for cryptocurrencies:
- Koinly Koinly is the top overall
Review the in-depth reviews:
Koinly Ideal for business and personal international and local filing and tax calculation.
Kindly is the top tax software for cryptos. It can connect with all the wallets and exchange blockchain addresses and services to get an accurate image of your invested money across various platforms.
- Connects to 353 cryptocurrency trading exchanges, with 74 wallets and 14 blockchain addresses.
- Automatically transfer your data to any source.
- We can export your transaction information to tax software such as TurboTax, TaxAct, etc.
- Monitors your portfolio across your accounts and wallets and gives you the real-time details of your profit, loss, and tax obligations.
The verdict: Koinly simplifies the tax calculation process by calculating the tax you must pay on crypto exchanges. It is easy to export the results of another tax program. The feedback provided by Koinly’s users Koinly gives a lovely picture of the tax software that uses cryptography.
- Affordable plans on paid plans.
- It integrates too many exchanges and wallets.
- International tax filing is supported.
- There isn’t an independent tax-loss harvesting software.
- Tax reports aren’t included in the free plan.
- For the newbies:$49 per tax year
- Hodler$99 each tax year
- Trader:$179 per tax year
- Pro$279 for tax-year
Accounting is Ideal for hobbyists and crypto traders with advanced skills.
Accounting is a cryptocurrency tracking and tax reporting software that allows you to easily track the market, review your portfolio, provide tax loss harvesting, and send you tax information to tax returns.
- Tools to analyze your portfolio to ensure you can make better decisions shortly.
- Let’s investigate the cryptocurrency market.
- Calculates your losses and gains.
- Prepares tax returns for you that are available to download and use in tax preparation.
- Tax-loss harvesting.
Review: The free version of Accounting is extremely beneficial for those new to trading since it allows tax reporting for just 25 trades.
- It’s easy to set up. Mobile and desktop devices are supported.
- It is compatible with over 300 different wallets and exchanges. 7500+ currencies supported. Portfolio tracking.
- Expert tax support for crypto.
- Priority support for Pro plan only.
- Trader: $199
- Hobbyist: $79
- Free Tax$0
- Pro: $299
TokenTax Ideal option for advanced users and businesses.
TokenTax is an application for tax purposes designed to calculate tax-related calculations on your cryptocurrency exchanges to help you pay your taxes. The features that automate tax reporting offered by the software make tax reporting simple to manage.
- Gives you audit assistance.
- Supports all exchanges.
- Harvesting tax loss.
- Automatically integrates with exchanges to collect the data you need.
- Ask for assistance from a crypto accountant.
- It is possible to calculate it as well as file your tax.
Test: TokenTax is an all-in-one tax software that can be used to file your taxes in crypto that calculates and prepare your taxes. The feature for harvesting tax losses assists you in reducing the tax burden of your clients. It is the highly recommended software for crypto accounting.
- Tax-loss harvesting tool is available.
- 85+ exchanges.
- There’s no free trial.
- The basic plan is bare of options.
Cost: Crypto + full tax pricing plans for filing range from $699 to $3,000 per tax year.
Plans for tax reporting on cryptocurrencies are as the following:
- Base:$65 per tax year
- High-end:$199 per tax year
- Pro$799 in tax-free years
- VIP$2,500 in tax years
ZenLedger is an ideal choice for business and advanced users.
ZenLedger is a taxation software that integrates more than 400 exchanges, including more than 30 DEFi Protocols. ZenLedger is providing its tax-simplifying services for crypto taxpayers and investors with more than fifteen thousand clients.
- Calculates your crypto gains and losses by using the information of the history of your transactions.
- Let’s connect with TurboTax.
- You can access a tax professional for all of its programs.
- Tools for harvesting tax losses and Unified accounting reports
Review: ZenLedger even offers a free plan, which includes the ability to access a tax professional. But, you can keep track of 25 transactions using this plan. It is an excellent choice for those who own their assets.
- Charges are based on the number of transactions performed.
- Decentralized applications are heavily supported but on costly packages (for more expensive users).
- Tax professionals are on hand.
- It’s expensive for a basic product that comes with professional support. More expensive than the competition.
- International not available.
- No cost:$0 per year
- Beginning:$49 per year
- Plus:$149 per year
- Executive$399 per year
Ideal for novice users thanks to its unlimited free level.
TaxBit is a tax-free crypto solution created by CPAs and tax attorneys for people who wish to convert their 1099s and other tax information into crypto-tax reports and businesses requiring 1099s.
TaxBit provides you with automation technology that syncs your information and provides you with final tax returns, and you don’t have to perform anything.
- It supports More than 150 foreign exchange partners and more than 2000 currencies.
- Let’s help you export your transaction report.
- A powerful dashboard will show you your tax situation assets, balances on your assets, and the unrealized profit/loss.
- The harvesting of tax loss and the ability to analyze portfolio performance features.
The verdict: TaxBit is reported to be a simple tax tool. Additionally, its customer support is also praised by its customers. Automating features that sync your transactions across various exchanges and provide tax reports while you don’t need to perform any action is an advantage.
- Customer service agents.
- Immutable audit trail. The issue of 1099s in exchanges.
- Manual formatting of CSV files.
- Limited auto-sync reports.
- Basis:$50 per year
- Prus$175 per year
- Pro:$500 per year
Ideal for diversified traders and investors.
Cointracking is a well-known tracker of cryptocurrency and tax reporting programs with 930K+ active users. It gives you details of the market trend for 12,033 coins and automation features for importing your cryptocurrency transactions.
- It provides you with tools to research the latest trends in coin trading.
- Provides you with reports on the amount of profit and loss.
- Supports the import of data from more than 110 exchanges.
- Allows you to export tax documents to CPSs and tax offices.
- Provides tutorials using Videos and FAQs.
- Reporting on tax for traders in crypto and crypto-related businesses
The verdict: Cointracking is a highly recommended tax software for crypto with several great options for tax reporting and market analysis. There’s a no-cost version, too, that permits monitoring of up to 200 transactions.
- Support for more than 5,000 coins. Multiple exchanges support.
- Crypto trading via API is available. A detailed charting system and portfolio tracking.
- Android and iOS apps for Android and iOS.
- The free version supports imports only for two wallets.
- Blockchain-based cryptocurrencies are not accepted.
- Pro: $10.99 per month
- Expert: $16.99 per month
- Unlimited: $54.99 per month
- CorporateContact, the company for pricing.
Ideal for comprehensive tax returns and tax filing.
BitcoinTaxes informs you of the profits and losses so you can report your taxes.
Additionally, you can get assistance from an experienced tax professional in crypto who can assist you in how to make crypto-related trades Bitcoin. tax
- Find your losses and capital gains.
- They also provide complete tax preparation services starting at $600.
- Get advice from tax experts for tax planning.
- The harvesting of tax losses.
The verdict: BitcoinTaxes is a recommendable cryptocurrency tax software with a broad range of pricing plans, so you don’t pay more to use less. Additionally, the variety of features available is appealing.
- Upload CSV documents and transfer transaction history from wallets and exchanges to make tax filing easier.
- Reports can be generated for income, capital gains, donations, and closing.
- Formula 8949 and TaxACT Form 8949, TaxACT TurboTax tax forms.
- The account has limited features that are only available to non-premium customers.
- The free version permits just 100 transactions.
There is a no-cost plan, and the paid plans are:
- Plus:$39.95 per tax year
- Premium Plus:$49.95 per tax year
- Advanced:$59.95 per tax year
- Trader (50k):$129 per tax year
- Trader (100k):$189 per tax year
- Trader (250k):$249 per tax year
- Trader (500k):$379 per tax year
- Trader (1M):$499 per tax year
- Trader (unlimited): Contact them to inquire about pricing.
Ideal for beginners.
Bear. Tax is a tax-related cryptocurrency software that can automate the import of all your financial transactions and calculate taxes in tax reports, then send the tax reports directly to the CPA or tax software you are using.
- You can import your trades into any crypto exchange you’re currently using.
- Automated feature for processing your tax returns and then sending these to the CPA and the tax program you use.
- Determine your gains and losses in crypto
- Offers sales reports, Audit trail reports, and many more.
Evaluation: Bear. Tax is an affordable and highly recommended tax software. The automated features provided by this tax software are very beneficial.
- Use traditional tax software for traditional tax.
- Ask tax professionals for help.
- Support for lesser markets. Around 50 exchanges.
- Not applicable for tax reporting in certain countries.
- Basis:$10 per tax year
- Intermediate$45 for tax-year
- Specialist:$85 per tax year
- Professional$200 each tax year
Best for tax-loss harvesting.
CryptoTrader.Tax is a well-known tax software used by over 100k clients.
It is compatible with over 10,000 cryptos, syncs with endless exchanges, provide daily profit and loss statements, and more.
- It lets you transfer your transaction information easily to different cryptocurrency platforms.
- You can download the tax forms that you have completed that can be transmitted directly to the tax program or your CPA.
- Many currencies around the globe.
- It offers resources to enhance your knowledge of the world of crypto.
- Complete audit support.
- Tools to a harvest tax loss.
Test:CryptoTrader.Tax is a highly suggested crypto tax software. It provides reasonable pricing plans and a diverse set of options.
- Tax-loss harvesting opportunities.
- TurboTax integration.
- Competitive with multiple levels.
- There is no direct filing of tax returns.
- Support for customers is not as good as at lower levels.
They provide a 14-day money-back guarantee. The pricing plans include:
- Hobbyist: $49
- Day Trader$99
- The High-Volume:$199
- Unlimited: $299
Ideal for comprehensive tax reports as well as mobile users.
CoinTracker is a trusted cryptocurrency tax software with more than 500 000 users. It monitors your portfolio in real-time and helps you save money using tax loss harvesting tools.
- Automated features allow you to transfer your transaction information from any crypto exchange.
- Find capital gains.
- You can export your tax returns into TurboTax as well as TaxAct.
- You can get a customized CPA for an unlimited package.
- It supports more than 2500 cryptocurrencies.
Review: CoinTracker is excellent tax software for cryptos. Its features are admirable. One of the major drawbacks is that it only tracks 2500 cryptocurrencies. This is lower than most of its rivals.
- Android apps, as well as iOS apps, are accessible.
- Twelve different ways to generate tax returns.
- Over 7,000 cryptos are available.
- Limited transactions (25) and no chat support on those on the plan for free. Unlimited transactions are only available on the paid plan with unlimited transactions.
There is a 30-day money-back assurance. Other pricing plans are:
- The HobbyistStarts at $59
- PremiumStarts at $199
- UnlimitedPriced individually
The History Of Crypto Taxation
- The United States, crypto taxation regulations are based on the 2014 IRS decision that states that crypto must be considered as bonds or stocks instead of euros or dollars.
- The cryptocurrency was not taxed before 2014.
- This is subject to capital gain and other business tax forms like many other investments.
- In 2019, it was discovered that the new cryptocurrency received through airdrops and hard forks is subject to income tax.
- Infrastructure bill 2022 requires cryptocurrency brokers and exchanges to provide transaction records for their clients to the IRS and individuals who require filing tax returns for capital gains and income. Decentralized exchanges also are affected.
Businesses that receive more than $10,000 in crypto must keep reports on the sender.
What Is The Process Behind Crypto Tax Software Function?
The software for tax filing simplifies the procedure of calculating and filing taxes in crypto.
It calculates gains and losses in crypto and either supplies this information or automatically fills out the tax forms to fill out taxes. They ease the burden of labor and time, but there is also confusion during filing taxes.
- Select your e-file program. Select your e-file program: The IRS permits you to complete this process via the website using this formal procedure. If you aren’t sure about the procedure or what software you should use, consult an IRS wizard to pick one. Use the procedure below to install the software.
- Connect your computer to the Internet. Register using the software.
Tax software for crypto determines taxes:
- Most software lets you join your cryptocurrency exchanges and wallets and collect their transaction information and historical data. It automatically does this and can even fill in certain fields on tax forms automatically. You might have to enter other information manually.
Integrate wallet exchanges:
- Input the required data on the application, including names, emails, adjusted gross income from the prior year, and either your or your dependents’ IRS electronically filed PIN (you can find one on the IRS website). The software will need you to provide your Social Security number as well as your W-2 forms from your employer, as well as any 1099-INT form showing interest that was paid last year.
- You can look at capital gains, calculate taxes automatically, and generate and download tax forms.
Tax reports that are automatically generated:
- Certain apps let you trade within the application. For example, you can integrate exchanges through the software’s API and place trades with exchanges. They may also have advanced charts for traders.
Other details include the 1099-G forms, which show refunds or credits of local and state taxes, receipts from your company, and/or additional income documents. You may also have to fill out unemployment compensation or Social Security benefits where they are available.
- The software can also give you access to tax experts with whom you can inquire about questions about taxation. In addition, these companies offer assistance to customers through chats, emails, or telephones, as well as other ways.
- Complete your returns electronically and then print them out. Follow the instructions for submitting your returns.
The features to look for in software for crypto-accounting:
- You should get audit support. This could include assistance from an accountant who is crypto.
- As many exchanges as you can. It will automatically integrate or sync with your exchanges to collect your data. You should be advised to use that information to calculate taxes and automatically file your tax returns.
- It will calculate crypto profit and losses and assist in tracking the transaction history.
- It’s affordable, even if you can’t use it for free. The majority of paid apps offer the most advanced features for advanced users.
- It is recommended to allow import and export reports on transactions.
- Has tax-loss harvesting opportunities. It will offer tax credits and deductions that you might be eligible for. However, you must decide on which one to choose.
- We should recommend tools for studying cryptocurrencies and trading tools, like charting.
- It is simple to use.
- Will meet the needs of an institution or trader.
- Provides complete audit support.
- The long-term storage feature is available in certain software so that you can look up records over a long period.
- The majority of software offers the option of filing state tax returns, in addition to federal tax returns.
- Most software will check the information entered and inform you if it’s in error.
How To Keep Track Of Crypto Taxes?
The tax software and crypto platforms offer efficient, complete methods to track and record your cryptocurrency trades as a trader and file tax returns. One of these platforms mentioned in this article will be a good fit for you. It’s no doubt that keeping track of cryptocurrency activity frequently throughout the year makes tax preparation much less difficult; however, it’s more fun to think about the idea of staying up-to-date with crypto trading as opposed to the actual practice of doing it — except if you’re a subscriber to an online platform for tracking crypto transactions.
For instance, on Koinly’s user-friendly dashboard, Koinly offers subscribers the capability to see their complete holdings, portfolio expansion, and tax obligations such as ROI invested in mining, fiat Staking, lending, profits, and losses, as well as capital gains and many other vital monitoring indicators.
Reporting Crypto On Taxes If You Lose Money
As with stock market trading, the profits and losses of cryptocurrency trades over a year are accumulated and compared with any other income earned in the same year. If you purchase or sell the asset, you are required to declare on the IRS on Form 1040 the date and value of the sale and your ” basis” of the asset. The basis is the price you received for your asset, plus costs associated with the sale, such as gas or any other costs and fees.
Even if you make an investment loss doesn’t mean you can’t pay taxes on the entire amount of your crypto sales during the same year. In a straightforward example, if you lose $5,000 on crypto sales but earn $7,000 from other crypto sales, you’d earn an overall profit of $2,000, which is added to the other taxable income.
Can IRS Monitor Cryptocurrency?
Suppose you have entered the Social Security number in any broker, exchange account, wallet, or other organization where you purchased or sold, staked, traded cryptocurrency, NFTs, or other DeFi instruments. In that case, the IRS will be able to track your activities. One of the reasons people like DeFi is the chance profit margins to be unreported and thus tax-free, Studio 54 style -However, the IRS has switched to platforms like Chain analysis to increase its efforts in tracking crypto-related enthusiasts who want to get around paying their fair share of tax.
How To Get Rid Of Cryptocurrency Taxes
While it is true that the IRS taxpayer bill of rights declares that “taxpayers are entitled only to pay the tax amount legally due,” the bill does not provide a basis for paying income tax that is legally due. The fact that you are trading crypto does not mean that you must be tax-paying. If you sell NFTs or crypto after correctly calculating the net profits you’ve earned from the transaction, you must submit the profit to the IRS on your tax return for income.
You can legally avoid taxes in a tax year by using tax-minimizing strategies like tax-loss harvesting, aiming for long-term gains over short-term ones, and bundling deductions.
When Is The Best Time To File Cryptocurrency Taxes?
Individual income tax for 2021 filed on Form 1040 are due April. 18, 2022. You have an option to extend the filing date -however, not the date of payment — until October. 17th 2022. The personal cryptocurrency you use to make a claim, NFT, and other DeFi transactions on Form 1040.
If your company, partnership, LLC, or business needs to disclose crypto transactions on its tax return, you’ll be required to file your tax return before the due dates for tax forms for those to stay clear of penalties. Form 1065 for LLCs and partnerships return filing deadline was the 15th of March, 2022, with an extension date of September. 15th 2022. The corporate form 1120 returns are due on the exact due dates for Form 1040.
Cryptocurrencies have gained a lot of popularity in a short period of time. The reason behind this is the chance of making a huge profit. However, if you decide to engage in trading in cryptocurrency, it is necessary to pay taxes. To achieve that, you have calculated the loss and capital gain accurately.
This is an extremely difficult task. Therefore, crypto tax software is available, making the task simple, automatically synchronizing the crypto exchanges and all your wallets. Tax reports can be obtained in a matter of minutes using tax software for crypto.
Koinly is the top crypto tax software offering impressive integration and automation features. It includes more than 300 crypto exchanges. It also provides tools to analyze your portfolio to help you invest more effectively.