Do You Know Which Crypto Tax Software Is Best?

Cryptocurrency Tax

Even though Cryptocurrency is an international phenomenon, you need to pay taxes where you live. If you do not, there’s a good chance that the tax authorities will find out about it. 

People know that they have to declare capital gains when they buy or sell stocks, but they may not know that the same is true for buying and selling cryptocurrencies. If you do not declare your gains, you risk criminal penalties – including prison time in some cases. It is essential to report all of your transactions. Otherwise, it is hard to prove which ones were profitable and which ones were not.

Tax Laws on CryptoCurrency

Most countries have very different tax laws regarding capital gains on cryptocurrencies compared to regular money or stocks. The IRS has very recently updated its requirements and methods of electronic filing for tax returns. As a result, the number of people required to submit electronically is more significant than ever before. Although it would be best if we could all hand-write our taxes—the truth is that many of us need software to help get through this process. There are many such programs on the market, each with its own set of pros and cons.

What is Cryptocurrency Tax Software?

Cryptocurrency tax software can be either of two kinds: 

  • Stand-alone software programs designed specifically to calculate gains and losses on Cryptocurrency. 
  • Online tools that automatically extract the relevant data from online exchanges.

Cointracting

You can keep track of all your transactions and calculate your taxable gains with Cointracking. This software supports over 1,500 Cryptocurrency, and it usually costs around $100 per year (90% discount). You will start by downloading the software and buying a license, then importing all your transaction data.

Requirements

  • Windows 7 64 bit (I’m not sure if it works on other OS, but 32bit should work too)
  • Firefox browser (other browsers might also work)
  • Kraken API key + secret + public key (required to import transactions)
  • Coins (I will be using BTC, XRP, and LTB)
  • Minimal knowledge in command-line tools and installing software
  • If you don’t have a Kraken API key yet, sign up for Kraken and generate your API key under Settings > Public API Keys. You can use this guide to get started with the Kraken API.

Getting started

First of all, go to Cointracking.info, create an account, and log in. Now you are presented with the dashboard. On the left side menu bar, choose “Enter Coins” to get started with importing your transactions into Cointracking. After selecting “Enter Coins,” you will see a list that shows the current version of all three supported exchanges.

Select which exchange you would like to use and follow the guide for importing your transactions (this should be self-explanatory). After importing your first transaction, Cointracking will automatically start calculating your gains or losses. If you wish to add more cryptocurrencies after completing this tutorial, go to “Enter Coins,” choose “Add Coins,” and paste in the TXID (not the URL) of your first transaction. Contracting will then fetch that transaction into its database, calculate all your gains or losses. Move on to the next transactions you imported. You can now start using Cointracking to get insights into your Cryptocurrency capital gains.

Koinly

Koinyx (software) is an application that allows you to prepare different types of documents, like tax reports. It also calculates the amount of tax you need to pay at the end of each quarter based on your Cryptocurrency earnings. You can use it for free, but there is a fee if you want to save your reports or send them via email (see pricing).

Koinyx is made by Koinly, who are also behind [coin-specific] wallets. Koinly products can be used for free, but there is a fee to save reports or send them via email. Always remember to back up your wallet and documents.

TokenTax

TokenTax is a crypto tax software that can help you to determine your capital gains and report accordingly. The main feature of TokenTax is the capability to automatically track every transaction from multiple exchanges, including Coinbase, Binance, Kraken, Gemini, Bittrex, Kucoin.

TokenTax also comes with an easy-to-use portfolio tracker so you can keep track of your total asset. A powerful analytics engine will allow you to scan the whole blockchain network in real-time. Locate transactions involving tokens and automatically calculate gains or losses. With TokenTax, there is no need to enter token transactions anymore manually. If you want to keep track of your crypto tax efficiently, TokenTax is the best choice.

Read More: The Most Valuable/Expensive Cryptocurrency Globally

How TokenTax Crypto Tax Software works

  • Supported Exchanges: Binance, Coinbase, Gemini, Bittrex, Kucoin.
  • Allows manual import of any wallet or trade.
  • Supports all currencies (BTC, ETH, XRP, etc.).
  • One-click calculation of realized and unrealized gains/losses for every transaction.
  • All the information about your transactions is automatically synced to your email address.
  • TokenTax provides you with all the tools you need to get your Cryptocurrency tax return done quickly and accurately.
  • TokenTax is now available for both Mac & Windows.
  • TokenTax has been featured by Forbes, CoinTelegraph, and many other crypto news sources.

BitcoinTaxes

Bitcoin and Cryptocurrency are some of the most integral and controversial topics in today’s technological world. BitcoinTaxes is a software program that automatically calculates capital gains as per the IRS guidelines.

CryptoTrader.tax

Offers automatic imports from various exchanges around the world.  I am not sure if they can automatically import from wallets, but I would assume you could import a CSV file containing your wallet transactions. Cryptotrader. Tax offers some pretty cool features, where they will provide information on how you should report for taxes, etc.

They can also monitor your trades and send email alerts if any transactions look suspicious, etc. Again, check them out to see if they would be a good fit for you. BitcoinTaxes is currently compatible with most bitcoin wallets and exchanges. However, not all of the features are available with every wallet or exchange. 

Best crypto tax software 2021

Crypto traders and investors in the United States want to know what Cryptocurrency tax software will help them file their taxes properly in 2021. For those who use Cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Litecoin (LTC), DASH, Monero (XMR), or other digital assets for trading and investing, the process of filing taxes has become more complex.

Best crypto tax software for DeFi

Forget TurboTax, and you need the best crypto tax software. Here is what you should know about H&R Block, TurboTax, and Credit Karma. H&R Block is leading in DeFi news at this time. The company is reportedly offering an official solution that’ll help merchants report Cryptocurrency transactions and purchases.

Here are best free crypto tax software options:

Crypto tax software companies make filing more accessible and more cost-effective for the Cryptocurrency community. The all-in-one software can accomplish most actions necessary to calculate your taxes. It’s compatible with the three most popular digital currencies: bitcoin, Ethereum, and Litecoin.

CryptoTaxPrep Tool

This CrytoTaxPrep Tool is an automated tool that has been designed to offer a quick and easy service. Input your details and complete the questionnaire, then wait for CryptoTaxPrep to analyze your information and generate the final file ready for you to submit.

DX-Tax

Another very reputable piece of free crypto tax software is DX-Tax. This software is a highly reliable tool to use. It is also highly accurate and offers support for multiple currencies. It even comes with a set of simple calculators for miners and investors alike.

CryptoTrader

Although this free crypto tax software is less well known than some others on this list, CryptoTrader is still a very credible option to consider. One reason for its popularity is that users can manage their entire Cryptocurrency portfolio. This software includes individual trades and current values in all major currencies.

TaxBit

The final entry into these best free crypto tax software options is TaxBit. This tool comes complete with advanced currency risk management, matching, and tax procedure alerts. This tool makes software one of the most comprehensive services offered by any Cryptocurrency tax software. It’s also simple to use, which helps make up for its lack of detailed reporting. The best free crypto tax software should allow you to calculate your gains or losses accurately. It should also make filing your return as painless as possible too.

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