These Tools Will Help You Calculate Your Crypto Taxes

taxes

#1


via bitcoin

Filing taxes can be tricky and in jurisdictions like the United States is notoriously complicated. But when cryptocurrencies are added to the equation things start to get even harder. Many aspects of the reporting of crypto income and profits are not yet clearly defined. However, a number of tax filing and calculation tools are trying to address the challenge and automate the process.

Popular Tax Calculators for Cryptocurrency Investors

Bitcoin Taxes is one of the earliest and most popular tax calculators for crypto enthusiasts. The online platform allows users to import data regarding their purchases and sales of cryptocurrency throughout the year from a number of major crypto exchanges. The service also includes mined digital coins in the balance and any spent or donated amounts of crypto.

Once the data is uploaded, the tool prepares several reports that cover the crypto-based income and the capital gains from cryptocurrency transactions. A closing report is then produced that contains the net profit or loss during the respective tax year. Bitcoin Taxes provides useful information about tax requirements in countries such as the U.S., the U.K., Germany, Australia, Japan, and Canada, explains basic terms related to crypto taxation, and shares simple tips like how to determine the cost basis of digital coins.

Coin Tracking is another tool that calculates crypto-related taxes. It’s quite popular with investors as it imports data from over 70 exchanges. It compiles the user’s trading history before providing an estimate of their tax obligations. Then, the summarized information can be exported in a variety of formats including Excel and PDF files. A capital gains report is generated only for users that have paid for the premium service.

Coinbase Offers Integration With Turbo Tax

An online crypto tax manager with a similar name, Coin Tracker, provides Coinbase users with the opportunity to obtain a full transaction history across all its platforms. The leading U.S. digital asset exchange recently offered traders help with the filing of their tax returns, announcing an integration with the popular tax filing platform Turbo Tax. Clients can now download their transaction history and upload up to 100 transactions at a time into the tax software through its crypto import feature which works with Coinbase and its iOS and Android apps.

However, to obtain a combined transaction history across all Coinbase platforms, including Coinbase Pro, customers need to use the services of Coin Tracker. Coinbase also offers its users a guide on crypto taxation and has developed its own calculator which can be used to produce a report covering purchases, sales, and other transactions performed through Coinbase accounts.

A universal calculator is offered by Libra Tax. Their tool estimates capital gains and losses after analyzing the crypto-related activities of their clients. The software connects to established cryptocurrency exchanges like Coinbase, Bitstamp and others in order to track transactions in major cryptocurrencies such as BTC, BCH, ETH and a number of altcoins. Crypto taxpayers can use the Libra Tax calculator for free for up to 500 transactions, while the paid subscription allows them to track 5,000. The premium service provides the option to download tax reports.

Zenledger is another provider of tax calculation services for crypto investors. Its solution enables users to import cryptocurrency transactions and calculate capital gains and crypto-related income thanks to its integration with leading digital asset trading platforms and support for most popular coins. Once the transaction history is imported, the tool generates capital gains, income, donations, closing reports, provides a profit and loss statement, and auto-fills tax forms such as the 8949. Zenledger’s starter subscription costs $149 and covers the processing of up to 500 transactions with a maximum total value of $50,000.

Tax Token is a relatively new company in the industry. It has been helping individuals with their cryptocurrency accounting since the beginning of last year but also develops products for CPA firms, crypto exchanges, high frequency trading platforms, and wallet providers. It recently released a new version of its software which uses artificial intelligence technology to automate the tax filing process. Tax Token offers free trials for some of its services, including its tax preparation program.

Do you plan to use specialized software to calculate your crypto-related taxes? Tell us in the comments section below.


#2

I used coin tracking for two years… If you use many exchanges, it is kind of necessary.
Never trust what you see on the screen, go through and review each transaction, they get it wrong sometimes.

If you transfer between wallets and it misses it, it will tag it as a taxable withdrawal instead of a non taxable transfer. Or if it sees a deposit come out of nowhere, it will give it $0 cost basis and you pay the most taxes.

You still need to check it all. Even a skilled CPA won’t know if you were withdrawing and releasing the coin or withdrawing to transfer to coin to another wallet you own.

Only you know your time line of events. So check it.


#3

I completely agree with you and thanks for the reminder @cryptoBrad. I have also seen it miss some deposits or airdrops too. But overall I have found Cointracker as the most reliable so far, despite the aforementioned nuances.