The topic of crypto taxation is highly controversial. It can be difficult for many to pay tax on trades you make on crypto exchanges. As crypto investments have grown in popularity, countries around the world are looking at ways to regulate the market. This includes enacting new tax rules. It can be difficult to keep track of transactions and calculate net profit or loss. Many investors find the crypto taxation process difficult, especially in the initial phase. If you trade in crypto currencies, we have reviewed and compared several crypto tax software to help you find the right one. These software automatically sync across cryptocurrency exchanges and wallets, calculate capital gains/ losses, and provide final tax reports that you can use to file taxes if required. This article will discuss the top crypto tax software: Koinly and TaxBit, ZenLedger and TokenTax. Trending StoriesCrypto taxation is the US. The crypto taxation rates in the US depend on how long you have a crypto asset, your overall income and your tax filing status. Additionally, cryptocurrencies can also be taxed either as ordinary income or capital gain, depending on the taxable event that produced them. These rates typically range between 0-45%. The categories that are subject to capital gains tax include crypto trades and sales, as well as swaps. The amount of crypto you have and your income will determine the exact rate. The tax rate for this area is between 0 to 37%. There is a catch. There is a catch. KoinlyFounded in 2018, Koinly provides tax reporting and crypto tracking solutions for investors. The crypto tax software has filed 11k tax reports, and $250 million in funds were tracked as of 31 Oct 2022. Koinly can help you create your crypto tax reports from anywhere in the world, including the US, Scandinavia, Japan, and Japan. Koinly can create a statement that shows all crypto income, regardless of whether you are mining in the Alps, or poolside using interest-bearing crypto assets. This includes income from:Airdrops
Forks
Take a chance on winning
DeFi and other crypto-income transactions
Kindly FeaturesMultiple cost-basis options. You can choose from FIFO, LIFO or HIFO.
Track your costs in a universal or wallet-based manner. You can track your costs in a pool that is shared between all wallets, or for each wallet individually.
Smart transfer matching. Crypto tax software uses artificial Intelligence (AI) to detect transfers between wallets and track your original cost.
Schedule D, Form 8949: Koinly is able to generate all forms required by US taxpayers.
Pros:Localized tax reporting
App offers a free version
Trustpilot gives it a rating of 4.7 stars
Supports more that 6000 cryptos and 350 exchanges
It is simple to use
Available in over 20 countries
ConsExpensive for frequent traders
2. TaxBit was founded in 2018 by CPAs and tax attorneys as well as software developers. TaxBit’s vision was to simplify crypto taxes by automating tax compliance. Taxing software is a new type of business that allows widespread adoption of cryptocurrency and digital assets. The platform connects consumers, enterprises, government tax and accounting systems. The platform transforms the cumbersome experience with cryptocurrency tax reporting and accounting into a way that ensures tax compliance, helps consumers optimize their investments, and provides industry-leading tax accounting solutions for cryptocurrency. TaxBit has over 5 million taxpayers’ backing. It boasts 500+ integrated wallets, DeFi protocols and NFT marketplaces. TaxBit also brings together all your cryptocurrency transactions and balances from exchanges and wallets into one location to calculate the cost basis as well as any gains or losses. It allows users, accountants, auditors, and others to drill down into each transaction to see exactly how the gain or lost was calculated. ProsHave provides friendly customer service and has received positive reviews on different platforms.
Free trial available
It is easy to file a crypto tax return
Provides an immutable audit trail
Great User Experience
Supports most crypto exchanges
It is supported by some of the most prominent names in the crypto market
ConsCSV file parsing could be improved (manual formatting only).
Relatively recent
3. ZenLedgerZenLedger Inc., a U.S.-based company that specializes in cryptocurrency tax management, is ZenLedger. The platform allows you to import cryptocurrency transactions, calculate gains, and income, as well as auto-fill tax forms like Schedule D, FinCen114, FBAR, 8949, Schedule, FinCen114, & FBAR. This software allows you to see the tax liability for each cryptocurrency transaction. This software allows you to view historical cryptocurrency tax income such as mining, staking and lending. It can also review exchange rewards like airdrops or forks. ZenLedger supports more than 400+ exchanges, 7000 token types and 20+ DeFi protocols. NFTs will soon be supported by the software. The crypto tax software can be used worldwide by anyone with multiple ledgers.
More than 400+ exchanges supported
The crypto tax software can be used by anyone with multiple ledgers.
Compatible with DeFi applications
It is simple to use
Cons:DeFi integration can be purchased in expensive packages.
It is relatively new.
The tax plan is free of charge.
4. TokenTaxTokenTax’s initial version was developed by Alex Miles back in 2017. Alex Miles, co-founder of TokenTax, created the initial version in 2017. Alex Miles, co-founder of TokenTax, developed the initial version in 2017. Investors can access three types of services depending on their level of trading. These include Basic (For casual Coinbase and Coinbase Pro investors), Premium (For investors operating across exchanges and platforms), and Pro (For investors with high trade volume across exchanges and platforms) at $65/per tax year, $199/tax year, and $799/tax year respectively.Pros:The software has Tax Loss Harvesting Dashboard and a Minimization accounting method.
For easy cryptocurrency tax filing, fill out your crypto tax forms.
Every exchange is connected and supported.
Cons: There is no free version.
Token tax does NOT offer refunds
5. FynFyn allows individuals, CPAs and Accounting Firms to calculate their crypto investments’ performance for tax reporting purposes. FynFyn was created to improve the way people manage their crypto taxes. It can import trades from almost every exchange via CSV, or you can use a generic CSV file if the exchange isn’t listed. The software allows you connect all your crypto wallets and view your gains and losses at any time. Are you a new user? You can download your files for free from Fyn. The crypto taxation solutions provider only charges for downloading detailed CSVs for tax reporting or capital gains (8949) documents if you have over 20 transactions.Pros:Investors can test the app for free for up to 20 transactions.
More than 400 exchanges supported
Fyn is integrated to leading exchanges such as Coinbase, Poloniex and GDAX.
If you have multiple accounts on one exchange, the software can be a great help.
Cons: No tax-loss harvesting tools
Only 25 countries support it.
How to minimize your crypto taxation Also, savings are more tax-efficient than long-term gains.
Gains can be offset by losses: If you have had gains and losses on different cryptocurrency, you can claim losses on the other cryptocurrency for a year. If you make $50,000 selling Bitcoin, but lose $50,000 selling Ethereum, there is no tax.
Donate some cryptos to charity as it is tax-deductible.
A third strategy is to avoid a large crypto tax is to put your crypto in a regular IRA, or invest in cryptocurrencies as part your retirement, pension, annuity, or other investments.