Taxes can be a hassle even if you don’t have any cryptocurrency investments. When you do have them, taxes become even more complicated. That’s why having a crypto tax software is essential when preparing your tax returns.
While many crypto tax softwares may have a CSV or similar format import, it is better to have an API (Automated Programming Interface). API is usually more accurate, secure, and immediate than using a CSV import. API is the best way to sync the data from your wallet or exchange platform into your tax documents. Make sure to check the import options offered by your potential tax softwares.
Fine Print Limitations
Some tax software limits the number of transactions you can upload into their programs. This may be a good option for a trader who doesn’t complete many transactions, but if you are a serious trader with multiple currencies and wallets, you’ll definitely want to find a tax software that has a very high number of transactions for their limit, or one that simply has no limits like TaxBit.
Since blockchain is such a new concept and taxing it is even newer, you’ve got to ensure you’re choosing a tax service that knows what it’s doing. Many services out there might simply be run by tech savvy traders that have developed a system and are now selling it. Make sure you find a service that has CPAs and tax accountants on the team. Beyond that, it is important that the tax experts are very familiar with crypto specifically as blockchain tax is unique.
Does the software you are considering have current portfolio analysis or does it only offer a one-time import and export come tax season? You’re already going to be paying for the service so you may as well get the most out of your money. Some crypto tax services offer live portfolio analysis. This means they can give you a good idea of what will be taxed based on your portfolio at any given time in the year. This is not just a nice feature, but it can be extremely useful in making decisions on whether to buy, sell, or trade to a different currency. Make sure you are getting the most out of your cryptocurrency tax software.
Integration with Your Tax Service
Certainly one of the most important factors in deciding whether or not to go with a crypto tax service is going to be whether or not the service integrates with your regular tax service. If you are just using an accountant or CPA for this, then you should be fine to use whatever service you like. If you are using a service like TurboTax or H&R Block, however, you’ll need to check compatibility with your crypto tax software. Not all software programs are compatible with all tax services. Make sure you do your research before signing up!
Price is an obvious deciding factor when it comes to choosing any service. Crypto tax software can range in price widely just like any other service. Depending on what your needs are, you may be able to get a free version of the software from your chosen service. This is unlikely if you are a serious trader or miner, but it’s worth looking into. Paid services can typically range from ~$200 per month to ~$250 per year. Remember that you’ll need to weigh the cost of each service carefully as you deliberate.
While the services differ widely in all of the factors mentioned above, it is vital for each person who has mined or invested in cryptocurrencies to get a crypto tax software. With all of the options that are available now, it is possible to find one that fits your needs just right. Now you have what you need to be able to do your research and file those taxes!