As more and more businesses around the world accept digital currencies as payment methods, it is no surprise that the rising volume of Bitcoin trading has drawn the attention of the tax authorities. The percentage of customers being audited in the US is quite low, but if a user is audited and has been found to have made substantial investments and earned good profits without paying taxes, a criminal conviction which can include prison time is a very real possibility. Therefore, it is advisable to pay any taxes related to digital asset investment income. These Top Crypto Tax Apps can help!
Here we will look at some of the top crypto tax apps that help with cryptocurrency tax reporting.
Top Crypto Tax Apps
The CoinTracking application was launched in 2013 and is one of the leading crypto tax apps for solving any tax issues/queries. This application enables users to link their exchange accounts to the CoinTracking accounts using either APIs or CSVs. As soon as a user links all trading accounts to CoinTracking, the enhanced tax reporting platform provides a detailed view of investments, gains, and losses performed by the user. The platform also provides exact details of profit or losses made and notify’s the user of unrealized profits too.
As CoinTracking supports more than 5,000 digital currencies and connects all popular exchanges using the API feature, it helps to automatically update the new trading data. This is useful if a user holds accounts on various international exchanges as tax requirements depend on personal tax jurisdiction and can differ from one country to other.
Besides this, CoinTracking tracks ICO investment income and any profits earned during cryptocurrency gambling activities.
Finally, the CoinTracking application helps users to generate a tax report that is relevant to their tax jurisdiction. For avid traders, CoinTracking platform charges a fee, whereas, it is free for those who have performed less than 200 trades. CoinTracking is fully encrypted to ensure greater security and privacy, and therefore the platform will not be able to access funds.
The functionality of BitcoinTaxes is similar to CoinTracking and it was launched in 2014. This cryptocurrency tax reporting platform allows users to generate a tax report by importing all trades from supported exchanges or through a CSV file and also by linking all transactions related to a digital currency such as mining income or donations.
The BitcoinTaxes implements a wide range of accounting methodology such as FIFO, LIFO, average costing, and comparing like-kind treatment. These approaches are used by the BitcoinTaxes platform to calculate gains and losses. As there is no particular advice on which approach should be used to calculate cryptocurrency profits and losses, users are free to choose any methodology such that they comprehend their capital gains/ losses.
Furthermore, BitcoinTaxes provides reports of capital gains related to investments, an income report based on cryptocurrency mining reports, a donation report based on donations made using digital currency, and a closing report that includes net profit and losses and the costs basis going forward. With all of it’s features, it makes our list of Top Crypto Tax Apps.
- Coinbase Tax Calculator
Also making our list of top crypto tax apps, is Coinbase Tax Calacualtor. Coinbase Tax Calculator is designed exclusively for Coinbase users, and was introduced in early March 2018. The blog post from Coinbase clearly reminds US users that all gains and exchanges on digital currency are taxable. Coinbase understands that filing taxes for digital currency is complicated and hence, Coinbase’s tax reporting tools are developed to make this easier.
With Coinbase’s tax tools, users can establish a detailed report of transactions associated with a Coinbase account. Specifically, it generates a single report which is a blend of all buys, sells, sends, and receives of all currencies transacted with the account. It also helps users to prepare a report for all purchases and proceeds from all sales, inclusive of Coinbase fees.
Coinbase’s tax calculator tool calculates gains and losses by employing the First In/First Out (FIFO) accounting methodology. Coinbase advises users to discuss cryptocurrency-related tax issues with an efficient tax advisor before filing as it is necessary to make certain that every detail is filed correctly.
LibraTax is another the top crypto tax app that allows individuals to keep track of cryptocurrency-related transactions including capital gains and losses. With enhanced features and versatility, LibraTax automatically coordinates and synchronizes exchange trades and wallet transactions for Coinbase, GDAX, BitStamp, BitGo, and Blockchain.info to generate reports on acquisitions, disposals, balances, and tax lots. LibraTax is free for up to 10,000 transactions.
CryptoTrader.tax is a popular website tool that provides excellent taxation services. It calculates capital gains and losses pertinent to cryptocurrency investments. A user can create an account with CryptoTrader.tax by using an active email and password details. The account creation is simple, quick and no confirmation is needed to log in to the account. Users can upload necessary trading data through exported .csv files from supported exchanges or use a template provided on the website. Other sources of digital currency such as mining and gifts can be included. Users can view a detailed report reflecting gains and losses for each coin sold or gained.
All the above-listed top crypto tax apps will work depending on the style of trading and investment. These apps solve the major issues of taxation and are suitable for those trading over 100 different cryptos. Though the taxation tools have some pros and cons, they effectively and simply show the breakdown of profit and losses so adding one to your kit is recommended.
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