It takes a genuine accounting guru to understand how the new system functions, but you can cut the long story short by using one of many apps or platforms developed to calculate crypto taxes. In this article, we will show you the seven best options.
There is a famous quote stating that “in this world, nothing can be said to be certain, except death and taxes.” It’s a simple but indisputable truth that quickly spread to the realm of digital currencies.
Tax institutions, IRS in particular, take their jobs very seriously and they put a special emphasis on cryptocurrencies ever since the price of Bitcoin rose over 2,000% in 2017, from $953 to $20,089. The IRS’ Guidance on Virtual Currencies notes that cryptocurrency is not a currency but rather property, which means that you have to pay capital gains tax.
Keep in mind that those cryptocurrency buyers who just accumulate their digital wealth cannot be taxed. But if you are an active seller or trader, you better prepare to pay taxes accordingly. This is easier said than done because crypto-related tax calculations are everything but simple.
TaxToken
We open the list with TaxToken, a fresh crypto tax tool that quickly won over a lot of renowned clients in this field. TaxToken is a comprehensive platform with all the basic features you need to calculate taxes and create the corresponding forms.
This tool enables automatic data importing, so you don’t have to bother with manual entries of information coming from exchanges or electronic wallets. Of course, TaxToken precisely calculates each one of your transactions and determines possible gains or losses.
It also fills in and creates a complete version of the Form 8949 and Schedule D, the two files you need to send to IRS. The core version of TaxToken calculates up to 200 transactions and starts at $49, while the pro package costs $99.
Bear Tax
If you are looking for a simple and intuitive crypto tax tool, then you should probably choose Bear Tax. This platform is keeping things under control as it doesn’t force clients to bother with things they don’t care about.
Instead, Bear Tax does it all on your behalf – it monitors transactions, evaluates revenue, and calculates taxes. Even better, the tool integrates with as much as 25 major crypto exchanges, thus helping you to trade globally without worrying about tax files. If you are not performing more than 200 transactions annually, go for the Bear Tax Basic starting at $30 per tax year.
Bitcoin Taxes
Although the name suggests that this tool focuses on one cryptocurrency, Bitcoin Taxes actually covers a broad scope of other digital currencies such as Ethereum, Bitcoin Cash, Litecoin, and many more. As such, it represents an all-encompassing platform with all the functions you need to file taxes effortlessly.
It’s impossible to mention every feature of Bitcoin Taxes, but the highlights include capital gain analysis as well as income, donation, and closing reports. Besides that, Bitcoin Taxes has a user-friendly website with tons of valuable information for cryptocurrency traders, which makes it a great learning source, too.
Token Tax
Token Tax is one of the true leaders of crypto accounting due to its ability to make tax filling look like a simple business. The tool integrates with pretty much every important trading exchange in the world and monitors trading activities of each client individually.
Token Tax has no limits as it creates every file type you may need. This includes documents like FBAR, 8938, Schedule C, 8949, and all other files you may request. What we love about this platform is the fact that it even gives you suggestions on which coins to sell in order to reduce taxes.
Efficiency is what makes this platform a bit more expensive, but the majority of users should be fine with the basic version of Token Tax. It costs $65 and supports up to 500 transactions a year.
ZenLedger
ZenLedger is designed for professional cryptocurrency investors who need a fully reliable taxing tool. It works with almost every digital coin, exchange, and fiat currency out there. With ZenLedger, you can never overpay taxes because it takes even the smallest reductions into the final calculation.
But as a highly functional platform, ZenLedger does come with a notable price tag. Its starter package handles up to 500 transactions and $50 thousand total asset value for $149. However, professional crypto traders usually go for the unlimited package that costs $999.
Coin Tracking
Coin Tracking is yet another highly reliable taxing platform that can fulfill the needs of the most demanding investors. This tool displays real-time feedback related to cryptocurrency transactions, gains or losses, coin values, and so on. It monitors almost seven thousand digital coins and serves 390 thousand clients.
Coin Tracking has another important advantage – it administers over 10 years of cryptocurrency trading data, which often serves clients as a precious source of information and a way to identify new trends. The pro package costs $161 per year, but you can also choose to pay in Bitcoins.
Coin Tracker
We close the list with another excellent tool that makes the tax filing process smooth and simple. Coin Tracker is user-friendly and therefore suitable even for beginner-level traders. It doesn’t only help clients with crypto taxes but also gives them the opportunity to analyze investments and understand the overall performance of their transactions. The so-called Trader version of Coin Tracker costs $195 per tax year.
Conclusion
Calculating crypto taxes manually can turn into a long and annoying process. Even worse, it can get you nowhere if you are not a professional accountant who follows the latest trends in developments in the crypto niche.
This is exactly why most cryptocurrency traders use digital platforms to calculate taxes. We showed you the seven most practical tools here, so it’s up to you to test them and choose the one that suits your business requirements.
Becky Holton is a journalist and a blogger at My Assignment Writing. She is interested in education technologies, grademiners review, bigassignments review, ukessays.com review, top essay writing services review, best assignment help and is always ready to support informative speaking at top dissertation writing services. Follow her on Twitter.