The most stressful part of being a crypto trader is when it comes down to calculating crypto taxes. It can be time consuming as the process of filing your tax returns largely depends on the number of crypto coins in your possession, the number of crypto trades you have done and the number of crypto exchanges you use to carry out the trades. The main difficulty stems from the fact that each crypto exchange uses a different output method to track your trades. Some exchanges do not use any output method at all which makes it harder for the crypto trader to accurately calculate their cost basis and capital gains. If each trade needs to be individually added and recorded meticulously, the entire process will be prolonged to a large extent. For this purpose, Bitcoin Tax Softwares been on the rise.
What are the Best Bitcoin Tax Softwares Available?
In recent years, the Internal Revenue Service (IRS) is coming down hard on the people who do not report their crypto activity. Due to this, Bitcoin tax softwares have become the go to solution when filing your crypto taxes. Some of the leading Bitcoin tax softwares are listed below along with their main features and pricing options.
BearTax
Beartax is considered to be one of the most easiest crypto tax calculating softwares to use.
This Bitcoin tax software can import all your crypto transaction data from over 25 major exchanges and then calculate your capital gains and losses. It can also provide you with export documents to file with your tax report.
Boasting of a number of useful features, BearTax has a clean and uncluttered user interface which is easy to understand. They have a ‘smart matching’ algorithm that matches your crypto withdrawals and deposits made to their supported exchanges which is displayed on their interface. You can review each trade and check for any negative balances.
They have a seperate section dedicated to capital gain or loss calculations. From this page, you can individually review your trade history on each crypto coin you own as the date you bought, sold or traded will be displayed with your corresponding tax liabilities.
This Bitcoin tax software is compatible with centralized as well as decentralized crypto exchanges. If the exchange you use does not have integration with BearTax, you can upload your crypto data in a CSV format onto Beartax’s platform.
BearTax has pricing packages that range from 99 cents to 199 dollars per year. However, all their packages include the following features such as capital gain or loss summary, the ability to download tax forms, view itemized data, support of unlimited crypto exchanges and one full tax year availability.
The main difference is the number of transactions each pricing tier allows which ranges from 20 transactions on the lowest package to an unlimited number of transactions on the highest package.
CryptoTrader.Tax
CryptoTrader.tax is another Bitcoin tax software that aids in calculating a trader’s capital gains or loss within minutes. Their user interface is designed in a way that makes importing crypto data hassle free and makes sure that you do not overpay your taxes. Completed tax reports can be uploaded into TurboTax (additional tool built into CryptoTrader’s software) for easier filing.
This software currently supports over 20 direct connections to crypto exchanges such as Gemini, Coinbase, Binance, Poloniex and Bittrex. Traders can also upload their trading data using CryptoTrader.Tax’s generic exchange template.
Once the trading data is imported, the software will automatically calculate your tax liability using the accounting method, FIFO (First In, First Out) which is what Certified Public Accountants (CPA) and tax practitioners use across the industry. After the calculation is done, traders can easily export these tax documents for filing, including the IRS Form 8949.
CryptoTrader.Tax has a feature called audit trail which precisely details each calculation used to get the net cost basis and sale proceeds. The generated reports include a short term and long term sales report, income report, closing positions report and a full audit trail.
This Bitcoin tax software comes with a number of pricing packages. The lowest tier is free of charge and has the ability to allow traders to import their crypto data and make calculations. However, to download these reports, traders will have to pay a one time fee.
ZenLedger
ZenLedger is also considered to be an easy solution for all your crypto tax needs. This Bitcoin tax software is integrated with most leading crypto exchanges and supports all major cryptocurrencies and fiat currencies.
Through their platform, they can quickly import all your crypto data from exchanges into their interface and proceed to fill out your tax documents automatically. These documents include your income report, donation report, capital gains or loss report and closing report. Apart from this, profit and loss statements can be generated for your CPA or tax practitioner if needed.
Zenleger’s pricing options range from 99 dollars to 299 dollars per year. These include crypto exchange support, tax reports and CPA access to the software. All documents that are generated from ZenLeger are IRS compliant which means that they can be sent from the software directly to your tax returns without facing any problem. The main selling point of using ZenLedger is that it not only caters to amateur crypto traders but also the veterans.
