The crypto market has caught the attention of investors all over the world, and many of them have invested in and made money off of this new digital frenzy.
However, it is important to remember that profits in the cryptocurrency industry are subject to taxation, and this can be a complicated process. There are likely to be several transactions in a year if you’re an investor in cryptocurrency. Everyone isn’t able to keep track of these transactions and then calculate net profit and loss. Even if your taxes are straightforward, it’s a challenge to have them done correctly. Cryptocurrency traders and non-fungible token (NFT) investors face a constantly evolving landscape when it comes to tax regulations.
Tax preparation software that is specifically designed for decentralized finance (DeFi), crypto, and NFT traders is your greatest line of defense. We’ve compiled a list of the top five crypto tax preparation tools for you to peruse.
Koinly
Among the crypto tax software options, Koinly is probably the most well-known. It has a simple user interface and is ideal for those just getting started. A $49-per-year subscription gives you access to a complete report that you can either provide to your tax preparer or use yourself, and you can import all of your data for free.
When you use Koinly to calculate your tax obligations on your crypto exchanges, you save time and effort. Also, the results can be imported into other tax preparation software with ease. Generally, Koinly’s customer reviews paint a positive picture of the crypto tax software.
According to the app’s own claims, you may complete your digital asset tax in as little as 20 minutes. Furthermore, Koinly, a tax preparation service available in more than 20 countries, performs your taxes and provides you with simple advice on how to lower your taxes going forward.
Pros
- On paid subscriptions, this service is reasonably priced.
- It is possible to file international tax returns.
- It supports a wide variety of exchanges.
Cons
- Free plans do not offer tax reports.
- Tax-loss harvesting does not have its own instrument.
ZenLedger
Support for API keys and CVS uploads makes ZenLedger one of the best crypto tax software. There are two types of subscriptions offered by ZenLedger: self-help and tax-professional-assisted. Chat, email, and phone support from the company’s team of specialists are accessible seven days a week.
Except for DeFi and NFTs support, the free plan contains all the features of the paid subscriptions. You can use ZenLedger for free for up to 25 transactions. Also, there are a variety of premium options available, ranging from $49/year for up to 100 transactions to $999/year for an unlimited number of transactions every year. More than 30 different DeFi protocols are also supported by this program, as well as integration with up to 400 exchanges.
Pros
- Charges are based on the number of transactions that have been completed.
- Tax experts are ready to help you with your needs.
- Supports DeFi on high-end packages.
Cons
- To access local tax forms, you must be a US citizen.
Accointing
Cryptocurrency tracking and tax reporting are simple with Accointing, a program that lets you keep tabs on the market, examine your holdings, and even harvest tax losses. It has support for over 300 exchanges via Accointing’s API or CSV, making it easy to connect your wallets. It can also track your portfolio.
It employs the API Connect function, wallet address, and manual input to automatically import your past transactions, as well as your portfolio profits and losses. It allows up to twenty-five transactions for free. As if that wasn’t enough, it also provides apps for Android and iOS. Additionally, there is a Tax Optimizer that lists trades to reduce your cryptocurrency taxes.
Pros
- It’s capable of tracking your portfolio.
- It’s an easy-to-use system.
- It supports both desktop and mobile platforms.
- It supports more than 7,500 different cryptocurrencies.
- Hundreds of exchanges and wallets are supported.
- You can access help with crypto tax issues from a tax specialist.
Cons
- Only Pro plans receive priority customer service.
CoinTracker
More than half a million people rely on CoinTracker for their cryptocurrency tax reporting needs. It keeps track of your portfolio automatically and harvests tax losses to help you save money. Users can send their data to tax advisors using CoinTracker. As part of their subscription options, they include DeFi support for those who want it. If you use TurboTax or an accountant, you can have your tax returns ready in minutes after downloading them. With the unlimited plan, you can also access a personal CPA.
However, the fact that it only tracks 2500 coins is a major negative, as several of its competitors track thousands more.
Pros
- It has a free option.
- There are twelve distinct ways to generate tax returns.
- Support from a CPA who understands your business.
- There are apps for both Android and iOS.
Cons
- There are restrictions on the number of free transactions (25).
- Free plans do not provide access to live chat.
- Only the unlimited premium plan allows an unlimited number of transactions.
TaxBit
TaxBit is the first tax software designed from the bottom up by CPAs, tax lawyers, and software developers to date. Also, it keeps a thorough audit record of all their computations, so a CPA or IRS inspector may easily check the accuracy of your digital asset taxes. It’s also an advantage that you don’t have to do anything to automatically sync your transactions across different exchanges and receive tax reports. To make things even better, TaxBit is fully integrated with all of the most popular crypto exchanges to make things even better.
Pros
- Able to work with any digital asset type
- Real tax specialists are in charge of the platform.
- Keeps an audit trail that cannot be altered.
- Issuance of 1099s for exchanges.
Cons
- In the case of CSV files, the formatting is done manually.
- Auto-sync reporting is limited.
In summary
There has been a dramatic increase in people investing in cryptocurrency over the past few years. Cryptocurrencies are taxed in different ways, depending on the country. We’ve talked about crypto tax software that automatically syncs with your crypto exchanges and your wallets to simplify tax preparation. Tax results are available in minutes, thanks to these kinds of crypto tax filing tools. However, you must select the one that best meets your requirements.
