Crypto Tax Softwares
Some people may find it confusing to deal with taxes related to crypto transactions. Keeping this in mind is important for anyone who trades to avoid unnecessary IRS scrutiny.
The right crypto tax software solution will simplify the crypto tax process if you are not able to devote the time or knowledge. In this article, we will discuss seven of the best cryptocurrency tax software options for 2022.
Why do you require cryptocurrency tax software?
As cryptocurrency grows in popularity, more and more people are earning huge amounts of money through it. As a source of income, crypto trades can be employed by some countries as a tax-free event. Currently, cryptocurrency trades are categorized under capital gains or income taxes in most countries.
If you're either a taxpayer or a businessperson, you know how difficult and complex tax payments are. Therefore, for most transactions you make, you are also responsible for the tax. Cryptocurrency income can be described in a variety of ways, and most of these methods are taxed differently.
Due to the overwhelming nature of tax filing, you may be struggling to find motivation to complete it. Tax filing isn't something you should put off, even if it's for cryptocurrency transactions, because inaccurate or late tax returns can get you in trouble. If any of this worries you, don't worry. Crypto transactions have an answer to the tax burden.
Cryptographic tax software is what these are
Did you know there is software that simplifies the process of paying taxes? They are known for their efficiency in tracking transactions, calculating capital gains and losses, and generating accurate tax returns. Integrating this software with exchanges and crypto wallets allows for automated data input on tax forms and downloading ready-to-use forms. Additionally, it is more secure.
To find tax software that helps you pay your taxes using crypto, you should first gather all the crypto data from exchanges. Then you can upload them to the software. Automated integration is also possible if the program allows it.
It is important to remember that not all cryptocurrency transactions are tax deductible. Tax-free cryptocurrency wallet transfers and charitable donations are permitted in most countries. Knowing what tax calculations apply and what don't is therefore important.
Let's take a look at the top crypto tax software. By doing so, you will be able to determine which options to choose. Here are seven of our top picks.
Koinly
Koinly offers crypto accounting and crypto tax software on one platform. Koinly's biggest advantage is its close collaboration with tax companies across the world and its acceptance by CPAs worldwide. The software also provides reports like Form 8949 and Schedule D in PDF format, making sending them easy.
With Koinly, users can connect to over 350 exchanges and 70+ bitcoin wallets. A variety of DeFi and cryptocurrency exchanges are also supported. Using its tracking of crypto portfolios, users are also able to gain a deeper understanding of their finances and financial performance.
Among its features are smart error management, easy transfers from wallet to exchange, and a guide to cryptocurrency taxation. It is also available in a free and a paid version, with the paid version offering more features.
Crypto Tax Software Solutions
ZenLedger
ZenLedger cryptocurrency tax software is another excellent tool for calculating cryptocurrency, DeFi, and NFT-related taxes. A significant amount of funding has been provided to ZenLedger. A Series-A funding round raised over 6 million dollars in 2021, and a Series-B round raised 15 million in 2022. Their business integrity is also demonstrated by the fact that they are the IRS's partner of choice.
The ZenLedger platform allows traders to integrate with more than 400 exchanges, including 20+ wallets and 40+ blockchains. Twenty DeFi projects exist. Transaction history can be imported from exchanges, and then required documents can be filled out. With this software, you can create closing statements, profit/loss statements, and crypto income statements.
Using ZenLedger crypto-tax software, you can also reach out to tax professionals if you need help. Pricing ranges from $0 to $999 per year.
CoinLedger
CoinLedger also offers an easy way to pay taxes on crypto gains. In addition to supporting over 10 000 cryptocurrency assets, it supports a wide range of crypto wallets and exchanges. Over 300,000 users use it and it provides real-time profit and loss reports.
CoinLedger's ability to import tax data and generate a printable tax form is its most impressive feature. The tax form can then be given to tax experts or any other tax software. In addition, the software can calculate Ethereum blockchain transactions and NFT transactions. Since it offers excellent customer support 24/7, it is an excellent choice if you are new to tax reports for crypto.
Accointing
Accointing is one of the easiest cryptocurrency tax tools to use. A Swiss-based software with an intuitive user interface can import data from other platforms. In addition to supporting over 300 crypto exchanges and wallets, it can also harvest taxes. Furthermore, Accointing provides one of the best portfolio management tools.
There is a free plan that doesn't cost anything and a paid version as well. The trader package costs $199 if you want more options and transactions than 25. However, they also offer free versions of the software, but they don't offer customer support.
TaxBit
TaxBit is a cryptocurrency-related software business founded by cryptocurrency tax lawyers and blockchain CPAs. Tax-related problems can be solved through it. TaxBit is also a popular software that has collected more than 230 million by 2021. TaxBit supports over 4200 different assets, aside from some commodities, equity, and fiat currencies.
Using over 500 crypto exchanges and wallets, users can easily manage long- and short-term gains in crypto, as well as profit and loss reports. For traders who need to calculate their taxes using Form 1099 and Form 8949, this tool is perfect.
CoinTracker
It is one of the most well-known tax software for crypto with over one million users. Using it, you can calculate capital gains, profits, and losses, as well as cryptocurrency activity. You can contact tax experts if you have any questions. Furthermore, the tool supports over 10 000 crypto assets and offers excellent customer service.
CoinTracker also comes as an app for both Android and iOS, unlike other software on this list. A free version is available, or you can purchase a paid version. For the free version, you get just 25 transactions and no chat support.
BitCoinTaxes
A web-based solution launched in 2014, BitCoinTaxes allows users to calculate tax rates for their crypto businesses. Based on the amount of crypto you trade throughout the year, it generates tax reports. You could also use this platform to generate your annual capital gains. The report is available for download at any time.
Like all crypto tax software, there is a free and paid version. The free version allows investors to calculate up to 20 transactions, while the most basic paid version can handle 1000 transactions. There are some cryptocurrency exchanges that BitCoinTaxes does not work with.
Conclusion
As an entrepreneur, calculating taxes is one of the most stressful and time-consuming tasks. Taxes are now an aspect of crypto, which makes it even more stressful. For people who trade in a lot of transactions, paying their taxes correctly will take extra effort.
Cryptocurrency tax software excels at this. Using them will allow for better tax management, which will be more precise, as well as more efficient tax management and tax payment.
As a result of improper tax procedures, this software can also help traders avoid fines and penalties. You should do your research and choose the right tax software for crypto that meets your specific needs.
FAQs
- What about taxation on cryptocurrencies?
Yes, you can do the crypto tax yourself. It isn't easy to accurately record and file cryptocurrency transactions because they are a huge amount of transactions.
- What is the most effective crypto tax software?
Koinly, ZenLedger, and TaxBit are all good choices. The needs of your business will determine which one will work best for you. This can vary from person to person.
- What happens if I fail to file my crypto-related taxes
Tax evasion and fraudulent activities can be committed by missing or avoiding crypto tax. This could lead to the possibility of an IRS audit. You could face penalties, fines, or even criminal charges for doing this.
Crypto Related Taxes
