By Larry Wright
In almost every part of the world, cryptocurrency has been recognized as a digital asset. So, if you trade any type of cryptocurrency and gain a financial advantage from the trades, you’re required to calculate and pay your taxes on time. In this article, we’ll provide you with everything you need to know about crypto tax calculation software and how it can make your life much easier.
Millions of people around the globe are showing interest in cryptocurrencies, and even more, they have already invested a lot of money into this lucrative market. There has been a rapid increase in the number of people investing in the crypto market. This is because of the massive number of opportunities provided by the crypto market.
However, just like with traditional finance, calculating and paying your taxes in cryptocurrency is also a bit difficult. You start, calculating your taxes for all the trades you did with crypto exchanges throughout the year can be a tough task. If you have invested a considerable amount of money in cryptocurrency, you might be doing several transactions throughout the year. So, doing tax calculations manually can be really hard and even impossible if you do not have any knowledge of this field.
So, in order to make tax calculation possible and easy for you, several developers have created cryptocurrency tax calculation applications. These apps can automatically synchronize with all of the crypto exchanges you use, use the collected data to calculate your profit and loss throughout the year and provide you with a detailed tax report. You can use the tax report created by these apps to pay your tax directly.
Cryptocurrency Tax Software
In this article, we will talk about some of the biggest and most popular cryptocurrency tax software you can use, along with a few of their useful features.
A pro tip you should always keep in mind while purchasing cryptocurrency text software is that you should find software that is really easy to use. That is because if the software is difficult to operate, you will need to hire an accountant at the end, which will increase the cost even more. Moreover, explore all the features of the software you purchase, as they might also provide you with valuable tips to save your tax the next time around.
Now, let’s take a look at some of the most popular cryptocurrency text software in use these days.
Koinly
Koinly is one of the most popular cryptocurrency tax platforms out there. The popularity of this platform is because of the feature-rich interface. It is one of the most popular cryptocurrency tax platforms out there. The popularity of this platform is because of the feature-rich interface it possesses. Koinly accurately calculates the tax amount you have to pay for a specific year and makes sure that you do not pay even a penny more than what is required by law.
One of the most useful features of this platform is that it can import all the data automatically. It also supports all the cryptocurrency exchanges out there in order to make sure that no exchange is left behind and your tax is calculated accurately.
Once the report is prepared, it allows you to go through every single point in great detail before exporting the sheet. It does the same when you are done importing the data at first. You can also filter transactions accurately and see which ones provided you with the most amount of profit.
Although Koinly provides you with lots of useful features and fully automates the crypto tax calculation process, it is still fairly cheaper as compared to other platforms out there.
Moreover, with just the free version of this platform, you can calculate your tax for up to 10,000 transactions. But keep in mind that you will have to purchase the premium plan in order to export the prepared tax sheet. All of the premium plans are valid for one tax year, and the amount of money you will have to pay to access the premium features of this platform varies depending on the number of transactions you perform within one tax year.
Even after using all the automated features of Koinly, you can easily get in touch with tax experts from their team and get all of your questions answered.
Crypto Tax Calculator
Crypto Tax Calculator is another valuable addition to the list of automated crypto tax platforms around the globe. This platform integrates seamlessly with every cryptocurrency exchange around the globe and collects valuable data to provide you with detailed insights at the end as well.
It automatically imports all the needed data and excludes things like airdrops and others on its own. After all the needed data is collected, it will process it for sometime and provide you with a detailed tax report for your cryptocurrency trades. The report will contain your total profit and the number of trades it took for you to achieve that profit within a tax year.
Once this platform provides you with a detailed report, you can either use the sheet to pay your taxes right away or forward it to your accountant, if there is any. A problem with the other crypto tax platforms is that they do not support regions outside the United States. However, Crypto Tax Calculator supports almost every country outside the United States. In addition to a large number of countries this platform already supports, more are soon to be added.
Even though the platform is clearly one of the biggest crypto tax platforms out there, the plans it offers are quite cheap and affordable for every crypto trader. The plans range from $49 for 100 transactions per year to $299 for up to 100,000 transactions with a single tax year. The customer support is also way better as compared to many of its alternatives.
Accointing
This Swiss crypto tax platform is also making a name for itself in the world of crypto tax calculation because of the widespread integrations it offers. The platform is so easy to use that even a complete beginner can use it seamlessly without going through a manual. Once you start the crypto tax calculation process, it will automatically import all of the transactions you executed within the last tax year and will calculate the tax for you within seconds.
Even after all the atomization, if you need guidance about any feature provided on this platform, you can get that easily from a well-updated blog maintained by this platform. This blog contains step-by-step guides on how to use all the different features of this platform easily. Moreover, since uploading your information is really easy, the tax calculation and filing process becomes even easier.
Just like any other good crypto tax platform, Accointing.com also supports lots of big cryptocurrency exchanges around the globe. The tax calculator used by the platform is fully compliant with IRS standards. Besides the United States, this tax calculation platform is also available for a few other countries and calculates your tax depending on the country you are living in.
When it comes to its plans, Accoinying.com does have a free basic plan, but that only covers 25 transactions per year. Premium plans come with their signature tax-loss harvesting tool and range between $79 and $299 for 500 and 50,000 yearly transactions, respectively.
ZenLedger
In addition to supporting crypto traders, this platform also focuses on supporting tax calculation professionals in calculating crypto taxes for their clients. If you are a crypto tax calculation professional, you can use this platform to generate almost every type of report required by your client. You can also calculate almost every type and form of tax at hand. The platform can also automatically import and unify all of your transactions before sorting them in an easy-to-understand manner.
As you might already know, ZenLedger is popular for supporting tax calculations other than cryptocurrency as well. Even the premium plans are designed based on accommodating both the traditional and crypto-related tax calculations. If you’re a professional looking to provide crypto tax services to your clients, there’s nothing better than using the premium plan provided by ZenLedger.
If you are unsure about the usefulness and efficiency of the platform, you can easily try a free trial account and process up to 25 transactions per year before moving on to professional plans. The plans range between $49 and $999; ZenLedger also provides a 20% discount occasionally. Moreover, you can avail an extra 20% off if you sign up for more than one year. So, after calculating all the discounts available on this platform, it can easily be termed as one of the cheapest cryptocurrency tax platforms out there.
Bitcoin Taxes
It is undoubtedly one of the most affordable cryptocurrency tax platforms out there, and it allows you to calculate cryptocurrency tax in a straightforward manner.
This platform works by simply importing all of the required data from every cryptocurrency exchange you use, processing it to calculate your capital gains within the last tax year, and providing you with a simple and easy to understand spreadsheet of cryptocurrency tax. You can also visit the website of this cryptocurrency tax platform to get answers to all of your questions.
In addition to providing the most affordable price on its premium packages, the platform provides special discounts for cryptocurrency tax professionals. You’re allowed to cover up to 20 transactions per year with the free plan. For only $40, you can cover up to 1000 transactions per year; other plans include $50 for 5k transactions and $60 for 10k transactions. The premium plans go up to $379 for up to 500,000 transactions per tax year. Bitcoin Taxes even provides you with an Audit Defence service for free with its premium plans.
Qualities to Look for in a Cryptocurrency Tax Software
If you are looking to become a crypto trader, it is important that you figure out how to calculate and pay your taxes at the end of every tax year. That is because cryptocurrency has now been accepted as a digital asset, and you have to pay tax for every transaction and profit you make while trading cryptocurrency. Therefore, you should be prepared to file your tax report at the end of every year.
Every cryptocurrency tax platform tracks your trading activity to calculate the tax accurately and prevent you from paying over the needed amount. Let’s take a look at some of the most desirable qualities you should look for in cryptocurrency tax software.
Integration with Crypto Exchanges
A good cryptocurrency tax platform should be able to automatically collect all the data imported from cryptocurrency exchanges. Since you will be executing hundreds or even thousands of transactions every year, noting down every transaction you do within a specific year manually can become almost impossible for you. Moreover, you’ll need to note down much more than just the trades. So, choose a good cryptocurrency tax platform with excellent integration, and it’ll work wonders for you by collecting and processing all the data automatically.
Moreover, make sure that the cryptocurrency tax platform you are choosing supports your country and its tax laws as well. You can easily look for this feature on the dashboard or by contacting the support agents before signing up for a premium plan with any cryptocurrency tax platform.
Always use a cryptocurrency tax platform even if you perform a calculated amount of transactions every year. That is because most of the platforms cover a certain amount of transactions for free. These platforms can also fetch all the data automatically without requiring you to input it manually.
Features
Good cryptocurrency tax platforms have automated features to provide you with insights into your transaction history. Moreover, popular platforms provide you with lots of additional yet useful features to simplify your tax filing process. For example, if a transaction is detected to be between your own wallets, there is no need for you to pay tax on that transaction. Other platforms will initially calculate every transaction and then remove the duplicate transaction, providing you with an accurate tax estimate.
Even if you are a tax professional, you can save yourself a lot of time by using these side features provided by cryptocurrency tax platforms. This way, you can handle lots of clients at once and maximize your earnings every tax season.
There are lots of cryptocurrency tax platforms that hire top-notch cryptocurrency tax experts for you in order to save your time. However, those platforms are only useful for big traders, who do not have enough time to hire experts on their own. These platforms will even hire an expert to manually recheck the tax report for you.
A few platforms offer to handle both your traditional tax and the tax related to your cryptocurrency transactions. They focus on providing a one-stop solution for crypto traders like you. However, the best way to prepare your taxes is by using dedicated tax platforms.
So, before you choose a tax software to calculate your taxes, you’ll need to take a good look at the features they include and whether those solutions would even be helpful for you or not.
Cost of Signing Up
One of the best ways to test a crypto tax software before signing up for its premium plan is by using its free trial. Other platforms offer less price for their basic plan to allow their users to check before paying for one of their professional plans. One of the best ways of knowing more about the features of a crypto tax platform is by using it yourself.
In addition to looking at the price chart, you should also consider the potential value you will be getting out of a premium plan. Only buy a premium plan if it actually supports the number of transactions you do per tax year. You’ll have to pay the price depending on the number of transactions you will require that platform to process. Additionally, you should look for any available discount offers provided by the cryptocurrency tax software you are going to use. Lots of software like these provide heavy discounts for first-time users.
Conclusion
The key takeaway from this article is that if you want to become a cryptocurrency trader, you must use cryptocurrency tax software to calculate your taxes and pay them at the end of every tax year. However, keep in mind that the software you use should support tax laws in your country.
In order to test the features of a cryptocurrency tax platform, you should first use the free trial and see how it works. This allows you to understand all the features of a platform in detail, and you can pull out before signing up for a premium plan if the platform doesn’t work well. You can also get the automatically generated tax report manually checked by a professional.