So far I've just bought-and-held small amounts of BTC and ETH from an exchange (Kraken) and transferred it from there to a Ledger hardware wallet, so have created no taxable events. I don't do mining, DeFi, staking or airdrops etc. But I would like to keep really good records that accurately log cost basis so that in the future if I sell it won't be a tax nightmare (for US taxes):
I've been looking at the different crypto tax services but it's really hard to work out which one is better. Most google searches for comparisons look like shills for one or another company, or are just really simplistic in their review, talking only about the user interface and not the most important aspect - tax accuracy - or privacy, security issues... so I was hoping to hear first-hand recommendations. A few that I've been reading about are:
So far I only have a handful of actual transactions but if you include the actual purchase, purchase fee, transfer to wallet, transaction fee, I guess it could be counted as more. Are each counted as a separate "transaction"? Would be nice if I could keep within the "free tier" some of these services offer, at least for now, but I can pay a small amount if needed. A few other questions:
- I semi-understand these services either connect to the API of the exchange, or use your xPub. How do people feel about the privacy and security aspects of this? Is it better to export and import .csv files? What are the options?
- How do they work with a Ledger hardware wallet and do they automatically match/compare data from that with data coming from exchange?
- I understand that fiat-crypto purchase fees can be included in the cost basis, do these softwares do that automatically?
- Is cost-basis affected by transaction fees from exchange to hardware wallet and do these account for that?
- What about tax-loss harvesting, different tax-lot cost-basis methods? Do they account for different filing status including the less-common married-filing-separately?
- Is there any non-cloud/offline/self-hosted software product that can do this reliably? I'm a little nervous about handing out financial info to websites. I've seen a couple on Github, but how can I be confident they calculating things correctly?
In general, just looking for any real-world experiences of using these tax software products and advice on how best to keep records. Thanks.
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