It’s no secret most tax authorities around the world tax cryptocurrency transactions. Cryptocurrency is an asset that appreciates in value.
The gains made whether you sell, trade, or use it for profit is seen by jurisdictions as a taxable event and is taxed like capital gains.
Summing up all these taxable events isn’t an easy task. It can be the most stressful part of crypto trading, calculating crypto taxes is dependent on a number of factors.
Factors such as the amount of crypto you own, number of exchanges you take part in, sale value, any fees associated, etc.
That’s why it’s beneficial to have cryptocurrency tax software to help you understand your tax exposure.
In this post, we explore the top 7 cryptocurrency tax software to help in your dealings with Uncle Sam.
What Is Crypto Tax Software?
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Cryptocurrency tax software is similar to Turbo Tax. The most important feature is its ability to calculate your tax exposure as you trade cryptocurrency.
Cryptocurrency tax software can calculate all your taxable events such as selling cryptocurrency for fiat or trading cryptocurrency for another.
Transactions such as these buildup over a year and must be reported back to the IRS or your countries tax authority.
Why you Need Crypto Tax Prep
Who wants to spend their time nickel and diming every single crypto transaction into a spreadsheet? Not only is the time-consuming process but a lot of expensive errors can occur.
In recent years the IRS has warned crypto holders of some serious consequences for evading taxes.
The last thing you would want is to be in trouble with the IRS. A good cryptocurrency tax software limits your tax exposure while saving you time to do other activities.
It also eliminates the confusion of all the different reporting needed to be filed. Because there are so many taxable events or transactions to keep on top of. Tax season can feel like a steep hill you have to climb.
The latest cryptocurrency tax software has advanced built-in features. Making the process super easy and many are priced reasonably.
The 3 Best Bitcoin Tax Software 2020
Top 7 Cryptocurrency Tax Software
Sign Up : CoinTracker
CoinTracker allows you to connect your crypto exchanges and wallets to its platform. Users can track all cryptocurrency balances and transactions across major exchanges & local wallets. It records taxable events like trading and selling cryptocurrencies.
Preparing up your tax filing. But, CoinTracker doesn’t actually file your taxes. Rather it generates an IRS form that records capital gains & losses.
CoinTracker features a crypto portfolio assistant, wallet tracker, and integrates with platforms such as TurboTax. Has a freemium subscription model and a tiered pricing model based on a user’s max yearly transactions. Support for over 2500 cryptocurrencies and can sync to a wide variety of exchanges.
CoinTracker also provides tax software for CPAs looking to help clients with their crypto needs. Check out our full review for more on CoinTracker
Sign Up : CyptoTrader.Tax
CryptoTrader.Tax allows their users to never overpay on their taxes by calculating their tax liability using the same methods tax professionals use. Importing all of your trades through exchanges and processing the numbers easily.
The API automatically pulls your crypto trading history and from all exchanges into the app.
Their technology can create a baseline for establishing a cost basis and fair market value for the transactions. Fully generating an overall cryptocurrency income tax report.
Features include a tax-loss harvesting, TurboTax integration, and wider coverage for international tax support. There isn’t a freemium subscription service and pricing is based on max trade volume.
CryptoTrader.Tax supports over 30 exchanges worldwide to the likes of Bittrex, Coinbase, and Etoro.
CryptoTrader offers CPA a free account to help them easily view, downloading, and filing. Check out our full review for more on CryptoTrader
Sign Up : Koinly
Koinly is great for both novice or expert crypto investors looking for advanced features and an elegant UI. Users can easily track their crypto assets & taxes across 73 wallets. The API can also sync with over 300 of the top exchanges.
Users can track margin trading, staking, lending & other DeFi services. No matter if your margin trading or staking, Koinly can recognize and tag all your income.
Koinly is also packed with tools to help you find problems with your transactions.
This does mean that it’ll count on you as a second line of defense for any issues it flags. Generate a range of reports. Including capital gains reports, income/transaction reports, end of year reports, and more.
Koinly provides its top of the line tax solution for over 20 countries. Offering Specialized tax reports for USA, Canada, UK, Germany, Norway, Denmark & Sweden.
Easily export these reports to tax filing services such as TurboTax, TaxAct, H&R.
Koinly pricing plan is tiered ranging from a freemium subscription to Oracle. The big differentiator is the transaction limit for each package.
Although the free version allows for 100,000 transactions you can’t generate tax reports.
Sign Up : BearTax
BearTax allows its users to create tax documents needed for crypto traders and investors. Integrating high-end technology and analytics with your exchange account. Capture the entire historical data for all your trades.
Like others on this list, BearTax has an API that can connect with more than 50+ popular exchanges via API and CSV. Building out the entirety of your tax documents instantly without needing much management on your part.
Features a smart matching algorithm. This algorithm matches withdrawals and deposits across supported exchanges. The goal is to help users save more on their taxes. Bear tax also has a team of CPAs that customers can utilize and a tailored auditing system.
BearTax has a very competitive tiered pricing model. The differentiator is the max number of yearly transactions each package supports.
Sign Up : TokenTax
TokenTax is a custom-built platform that handles cryptocurrency taxes from capital gains calculations to generating users’ tax forms.
Supporting every major exchange, it’s super easy to report your cryptocurrency trades in an automated fashion.
Users with a more complicated crypto tax history like those who take part in crypto margin trading and derivatives traders. Will love Tokentax’s API. As it can automatically import profits and losses from BitMEX, Deribit, and Bybit.
TokenTax’s key features are its ability to incorporate margin trading taxes, tax-loss harvesting, and a suite of tools for CPAs.
Unlike some of the other crypto tax software on this list, TokenTax supports a wide set of countries, in any currency. Pricing model ranges from basic to VIP. The differentiator is the number of max transactions and exchanges being used for basic users.
Sign Up : TaxBit
Need something that is very secure and built by CPAs? Then you’re going to want to look into TaxBit as a solution to generate your cryptocurrency tax forms. TaxBit’s software automates the calculations required for crypto tax reporting.
Providing users with both a cryptocurrency tax and portfolio manager. TaxBit connects all cryptocurrency transactions across multiple exchanges.
At any time generating a tax form that can either be handed over to your account or loaded in a tax filing software such as Turbo Tax and Taxact.
Some of the benefits provided are tax optimization, loss harvesting, and even in-depth CPA reviews.
TaxBit does offer a 15-day free trial. Pricing model is premium and tailored for expert traders who perform a higher number of yearly transactions.
Sign Up : Zenledger
Zenledger has a web-based tax tool that integrates with a dozen exchanges and wallets. It simplifies crypto and DeFi taxes for investors.
The platform quickly imports transaction history and fills out tax reports in an automated manner.
These reports include capital gains or losses, Schedule D, and Form 8949 just to name a few. Forms are built to go, quickly export forms from the ZenLedger platform into your tax returns easily.
ZenLedger is a versatile platform meant for all sorts of crypto investor types. Profit & loss statements can be provided for miners, day traders, or hodlers,
Key features include Audit reports, TurboTax Integration, and Tax Loss Harvesting. Users can start off with a free ZenLedger account and upgrade to the plan that best fits your trading style.
Pricing model is tiered, ranging from free to unlimited.
The differentiator is the transaction limit and the type of DeFi services supported for each package.
Things to consider before looking into Crypto Tax Software
The cryptocurrency tax space has been growing a lot more in recent years. Which is good for bitcoiners as they’ll have more options to choose from.
All the different options may seem overwhelming, but there are few things to consider that can help in narrowing the right one for you.
Are you a hobby trader that performs less than 25 transactions a year? Then considering free crypto tax software is a bit more up your alley.
Do you consider yourself more of an expert trader? Someone who makes thousands of transactions a year and has several exchanges they take part in. You’re better apt for a detailed crypto tax software that can sync with all that you do.
Features are another area to consider. There is cryptocurrency tax software that can also act as a crypto portfolio tracker or have a better built-in API. Which can integrate with your CPA software.
Others may be more premium but offer a clean user interface with dashboards for savvy crypto investors. Finding out your trading style, exchanges supported, and all cool features can solidify what’s best for you.
Finalizing Our Round-Up
The years to come introduce immense opportunities for Crypto investors. Whether you trade, mine, or lend cryptocurrency one thing is common death and taxes.
There is no way of avoiding it so finding a dependable cryptocurrency tax software will be more important than ever.
We created this guide to help those looking for legit tax services. Services that can remove the painstaking process of manual maintaining your crypto taxes.
Remember your choice isn’t permanent, in fact, you can trial some of these cryptocurrency tax software.
Making a free profile or participating in a trial offer is easy and poses no risk to you. Whichever tax services fit we hope it helps you during tax season.