TLDR
For every crypto transaction, you’re obliged to pay taxes. Managing income taxes and filing tax records can be challenging when dealing with numerous crypto assets, exchanges, and wallets. Luckily, we have researched and provided our users with the best crypto tax software.
The software automates capital gains and losses calculations, tax report generation, and filing while providing portfolio performance insights.
Some popular types of crypto tax software are desktop-based, cloud-based, mobile-based, API-based, and crypto-specific programs.
Consider reliability, integration, versatility, support, security, cost, and transparency to choose the right software.
Introduction
Over the years, there has been a tremendous surge in crypto transactions. Given the rising popularity of cryptocurrency, it’s safe to say that more people will opt for crypto investing.
This blockchain-supported currency market shares moments of both vast gains and losses. Although investors may find calculating their crypto gains exciting, they should know that such capital gains reports may come with tax liabilities.
Everyone must pay taxes for all their crypto transactions – from crypto trading newbies to O.G.s who make crypto profits have been around for years. Whether minting NFTs, crypto mining, staking, trading, or lending, any crypto activity is taxable.
With the advent of tax liabilities and new regulations occasionally regarding tax forms, the need for accurate crypto tax filing has become crucial. To do so, you must keep your tax documents and reports documented, organized, and well-maintained.
This is where crypto tax software helps you out. Such software enables you to calculate crypto taxes on both gains and losses from crypto transactions. This software is also capable of taking deductions on expenditures from crypto taxes.
Thus, the comparison guide outlines some of the industry’s leading crypto tax software programs to simplify crypto trading for you.
Overview of Crypto Tax Software
As a crypto investor, you will most likely perform numerous crypto transactions annually. Keeping track and record of such transaction data and subsequently calculating gains and losses can be daunting and challenging for many.
Using the best crypto tax software can save you all the hassle. A crypto tax tool will automatically sync across multiple wallets and exchanges, calculate your capital gains and losses, and generate tax reports. You can later use such reports to file crypto taxes.
Crypto tax software simplifies recording all your transactions, keeping track of your net capital gains or losses, generating tax reports, and sending those tax reports back to the IRS.
The best crypto tax software comes with features like portfolio tracking or complete audit support. Such features help you comprehensively overview your crypto assets across multiple wallets and exchanges.
The best part is that most crypto tax software enables you to calculate capital gains tax and file crypto taxes conveniently.
The Rising Need For Crypto Tax Software In 2023
The regulations across the crypto market are complex to traders. That’s why crypto tax software has become more than a necessity today. If you step out of the crypto taxation world, you’ll realize the volatility around how technology or crypto assets will be streamlined and regulated.
Crypto tax laws remain unclear across jurisdictions, confusing reporting capital gains in this emerging sector. Regardless of experience, selling crypto assets, whether received as a gift or payment, incurs tax liability.
Even if you use crypto to buy something in a retail shop or online store, you’ll have to pay tax file taxes for such a transaction. Thus, anyone indulging in this blockchain-supported market and planning to make a career out of it will face difficulties managing these taxes. The best solution to simplify all these tax obligations is to automate all tax-relevant activities with crypto tax software.
How Does Crypto Tax Software Work?
A crypto tax software platform simplifies generating your crypto asset tax reports while taking care of tax deductions and crypto portfolio tracking. The top crypto tax software will manage and streamline your portfolios for multiple crypto assets across different exchanges and wallets.
After determining which tax software to use, you must connect and integrate it with your crypto exchange or wallet account. After that, the tax software will automatically simplify and manage your crypto transaction data.
Subsequently tax year, the crypto tool will classify such data into gains and losses. Based on the legal requirements of your country, the software enables you to understand what you should pay taxes on and what not. Such insights can either be filled automatically for tax reports or manually for tax filing.
The best crypto tax software can also generate completed tax forms for multiple taxes. Crypto tax software enables you to monitor the crypto market by offering insights into the general market with live crypto prices.
Now that you know how crypto tax software works and why it’s necessary for the tax year 2023. Let’s check the best programs to help you get started.
Types of Crypto Tax Software
Several types of cryptocurrency tax software are available, each with unique features that may suit different users. These include the following:
Cloud-Based Crypto Tax Software
One type is cloud-based cryptocurrency tax software. This type provides access to a user’s account from any device with an internet connection and stores data securely online. Cloud-based solutions often have integrated features such as portfolio tracking, automated crypto portfolios, and optimization tools.
This type of crypto tax software is popular among beginners looking for something more reliable. This tax software supports multiple exchanges and cryptocurrencies. You can share your crypto tax reports with other tax professionals via the cloud-based software. You can do much with this software, from saving money via the tax loss harvesting tool to importing transaction data to portfolio tracking.
Like any other crypto tax software, cloud-based tax software also comes with customer support for any query or issue via phone, e-mail, and chat. The target audience of this software type is mainly all business enterprises and cloud enthusiast traders. Tax professionals can leverage the power of this type of crypto tax software to get things done remotely and quickly.
Pros of Cloud-Based Crypto Tax Software
Portfolio Tracking
Wallet assets are combined to show portfolio allocation and tax repercussions in a single location. Individuals can also explore other passive income sources, like mining, gambling, and lending.
Tax Loss Harvesting
This cloud-supported tax software facilitates easy and seamless tax loss harvesting. They ensure NFT or crypto loss realization by looking for opportunities using your data.
They carry forward or utilize such realization to offset profits in other portfolio segments, thus saving you a lot of money on income tax.
Smart Transfer Matching
These software solutions leverage the power of cloud-based technology to detect and find out transfers between owned crypto wallets.
Doing so helps the platform to deliver precise cost-based tracking. Such a cloud-backed system helps traders to get tax reports with 99.99% accuracy.
Cons of cloud-based crypto tax software
Expensive Pricing Model
Due to using the latest, state-of-the-art cloud-based technology, subscriptions get expensive when it comes to cloud-based crypto tax software. You won’t be able to generate tax reports automatically under such a platform’s free plan. The high pricing plans make using this software difficult for many traders – especially low-volume traders.
Desktop-Based Crypto Tax Software
Another type is desktop-based cryptocurrency tax software. Desktop-based solutions allow users to store their data locally on their computers or servers. This option gives users greater control over their data and can be ideal for those who don’t want to store their data in the cloud.
This excellent crypto tax software streamlines the taxation work for all crypto transactions. This software has earned its reputation as a beginner-friendly choice by skipping the inclusion of complex technical features like the ones in cloud solutions.
This desktop-based crypto tax software helps you import all your transactions via modes like manual input or API Connect. From managing capital gains and losses to importing transactions from multiple crypto platforms, you can get a lot done through this type of crypto tax software.
Usually, this software features a user-friendly interface, which is ideal for crypto firms and traders. This software offers top-notch quality tax reporting and filing services by assuring regulatory compliance with your country.
Moreover, you get to use features like portfolio tracking for thousands of digital currencies. What makes desktop-based crypto tax software so compelling is its customized tax service. The software enables seamless collaborations and unlimited transactions between CPAs, tax professionals, attorneys, and clients.
Additionally, the software offers a top tax loss harvesting tool, saving money with each trade. Desktop-based crypto tax software has grown popular among traders seeking hassle-free calculations for gains and losses.
Pros of Desktop-Based Crypto Tax Software
Coin Charts & Trends
There’s chart history for thousands of coins at such a focused platform. They consistently provide the most current values for all coins in addition to the most traded and most-used coins. You can get statistics and analyses about coin trends. Locate all the transactions you need to annotate. Apply filters when calculating your mining revenue deposits.
Excellent Flexibility
With desktop-based crypto tax software, you can easily store and manage your data over your local computer. It is an ideal and flexible solution for anyone who doesn’t want to secure things over the Internet. You can always switch on the desktop; all information will be there. Controlling your transaction data becomes easier for both you and our tax professionals.
Real-Time Tax Bill Preview
To avoid being unprepared, desktop-based crypto tax software lets you track and preview your tax obligations. The tax reports from such software mostly include tax loss harvesting tools, depreciation, LIFO, FIFO, mining, and staking income tax reports.
Cons of desktop-based crypto tax software
Unavailability of Free Trial Version
There’s no free trial version available on the desktop-based platforms. Paying for a free plan on such platforms before using any of their features is necessary.
Given the high pricing plans, spending money on such a platform may not be worthwhile if they can’t meet your needs and preferences. Without a free trial, there’s no sure way to determine whether it’s worthwhile.
API-Based Crypto Tax Software
Next, there are API-based cryptocurrency tax software options. These solutions allow users to integrate the tax software with their trading platform or exchange, allowing them to access data without inputting it manually every time.
This can be an excellent option for traders needing more comprehensive portfolio performance tracking and analysis. These software solutions let you use API keys to add as many famous exchanges as possible.
From tax loss harvesting tools to a professional tax suite of auditing tools to crypto tax tips, you can get it all with these crypto tax software free solutions. This crypto tax software may sometimes provide a downloadable tax form that you can send to your tax professional or other crypto tax software without fuss.
This software supports multiple exchanges, wallets, and protocols like NFT, DeFi, and CEX platforms. Most API-based crypto tax solutions have an intuitive dashboard for strategic decisions like tax loss harvesting.
Such software allows you to import CSV files automatically and import OTC and ICOs crypto trades import transactions manually. These software solutions adhere to and follow multiple reporting standards, from international tax reports to income reports to IRS Form 8949.
The best part about API-based tax software is that it supports all crypto exchanges and tax jurisdictions worldwide. No matter which country you live in, it means you can access this software to manage your crypto tax report.
Pros of API-Based Tax Software
Margin Trading
Not only does this software offer margin trading, but it also provides API integrations to most exchanges that support margin trading. Based on the exchanges they prefer, users may be required to switch to a better pricing plan to use all of the margin trading support that isn’t available at the particular software’s basic level.
Imports From Multiple Exchanges
These tax software solutions claim to be the only crypto tax software in the industry to connect with every crypto exchange. If an API integration is unavailable, the software can still import trade data successfully. Take no stress if the software can’t process the tax reports automatically, as their human staff will do it for you.
Tax Loss Harvesting Tool
This type of software aims to reduce the overall tax burden of the customers by facilitating instances for tax loss harvesting. Such software types enable traders to reap the benefits of instances when trading doesn’t go right.
Cons of API-Based Tax Software
Not ideal for beginners
The use of API-based crypto tax software may not be ideal for beginners. That’s because such software involves many API keys and multiple integrations with hundreds or thousands of exchanges and wallets.
Crypto-Specific Tax Software Solution
There are crypto-specific tax software solutions. These options are specifically designed for cryptocurrency traders and investors and provide features such as automated filing of taxes, portfolio performance analysis, and more.
With millions of active users, corporate clients, tax attorneys, and CPAs, crypto-specific tax software solutions are among the best international crypto tax management solutions. This type of tax software is more focused on your diversified crypto portfolios.
That’s because it lets users analyze the performance and trades of thousands of tokens and coins apart from tax reporting and filing. These software solutions support integrating hundreds or thousands of crypto exchanges through APIs.
You get plenty of service from this crypto-centric tax software, from capital gains and losses reports to audit reports. These software solutions are primarily available in hundreds of countries.
Many crypto-specific tax software solutions offer the benefit of customizable and interactive types of charts for thousands of digital assets. This software works like any other tax software, offering customers excellent crypto tax reporting tools to help them generate tax reports and file taxes without hassle.
The few reasons why so many crypto traders and crypto enterprises use this type of software are trade imports, coin charts, responsive customer service, portfolio analysis, tax declarations, coin trends, and customer security.
Pros of Crypto-Specific Tax Software Solution
Automatic Data Entry
Crypto-specific tax software alleviates the need to manually record the transaction data, including the transaction date, how many tokens were bought or sold, the price, etc.
Dedicated crypto-specific tax software will automatically record and represent all your transactions in a tabular or ITR format.
The best crypto tax software ensures minimal or no errors in calculating capital gains taxes. These software solutions are ideal for high-volume traders who execute multiple daily transactions.
Pre-filled and readily Available Paperwork
A crypto-specific tax software records all your transaction history taxes and offers a download option for all relevant tax forms and documents. Most crypto-specific tax software tools aim to simplify tax reporting and tax filing by pre-filling paperwork for you.
Not only IRS tax forms, but such software tools also offer other pre-filled tax forms. These tools usually never fail to adhere to the latest tax obligations in your country while automating paperwork and other functions like complete audit support.
Wide range of Features
Every crypto tax software comes with its personalized set of features. The variety and uniqueness of the features vary from brand to brand and their pricing plans.
For instance, smart transfer matching is a popular feature of any crypto-specific software that allows it to identify transactions between your crypto wallets. Thus, if you’re both the sender and receiver in a crypto transaction, this feature will detect it and save you from paying taxes.
These software solutions also prevent or stop transaction duplication with the help of the double-checking feature. Also, the tax loss harvesting feature helps you save money while performing transaction history calculations.
Multi-Asset Tax Software
Multi-asset tax software solutions support multiple cryptocurrencies and other asset classes, such as stocks and bonds. This type of software is designed to help users manage their entire crypto portfolio in one place and make tracking performance across multiple asset classes easier.
With a multi-asset tax software solution, you can quickly and conveniently track and keep a record of multi-asset portfolios of your whole family or organization under one roof. These tax software solutions enable you to import transaction data from hundreds of brokers, monitor and analyze portfolio performance, and generate capital gains tax reports in ITR format.
This tax software lets you track investments in Crypto assets, Bonds, PMS, Mutual Funds, AIF, and other assets. Such a software solution lets you enjoy complete automation of your portfolio tracking. It lets you import contract notes directly from mutual fund C.A.s, brokers, and other trade and tax reports.
Everyone who invested in multiple asset classes to diversify their portfolio will know how hard and time-consuming it gets to track all those portfolios, keep records, and generate reports on its basis. This is where the use of multi-asset tax software comes to aid.
Not only does such software let you manage your diverse multi-asset classes, but it also helps you prepare for tax reporting and tax filing for all transactions involving crypto and other assets.
Pros of Multi-Asset Crypto Tax Software
Integrations
The best crypto-specific tax software supports all popular exchanges, tokens, and stablecoins. It allows you to leverage a single application to track and record all your transactions and activities, no matter how many crypto or other assets you invest in.
The hassle of switching from one app to another is tiresome. Plus, things get complex and challenging when you perform manual tax calculations on tokens or assets that your crypto tax tool doesn’t even support.
Thus, using multi-asset software that offers great versatility will benefit you in expanding your trading opportunities without any stress about the tax report generation process.
Security
Whether you choose crypto tax software, ensure it is secure and reliable, as its usage involves your profit and transaction data. By using secure, trustworthy crypto-specific tax software, you will ensure always generating accurate reports, keeping the data protected, and having a user-friendly interface.
Multi-Asset Portfolio Tracker
Whether you invest in AIF, PMS, F&O, Bonds, Mutual Funds, Stocks, or any other asset, tracking them becomes easier with multi-asset tax software. It allows you to seamlessly automate your portfolio tracking by importing contract notes from hundreds of trade reports, mutual funds CAS, and brokers.
Mobile-Based Crypto Tax Software
Finally, there are mobile-based cryptocurrency tax software solutions. Mobile-based solutions provide an easy way to access your data from any device with a web browser. They may also include portfolio monitoring, trading tools, and automated tax calculations.
They are an excellent crypto tax software solution that simplifies the entire process of tracking and importing all your crypto transaction data over your fingertips. Now, you can use Android or iOS smartphones to seamlessly integrate your trusted crypto tax software with hundreds of exchanges and DeFi protocols.
Hundreds and thousands of customers now prefer using mobile-based crypto tax software as they support thousands of cryptocurrencies in different exchanges and wallets, offer real-time tax reports on capital gains and losses, and import transaction history data from multiple crypto platforms.
These software solutions come with a clean, mobile-optimized, friendly user interface and support integrations with multiple platforms. The best part is that this software allows you to invite your income tax professional on the dashboard to view and assess the tax report and download it from there.
Lastly, the customer service of such software solutions is good, as e-mail and chat have a high response rate over mobile devices.
Pros of Mobile-Based Crypto Tax Software
Excellent User Experience
You can use mobile-based tax software to enjoy access on iOS and Android devices to manage accounts seamlessly. This software comes with an intuitive, attractive, and minimalistic interface. Moreover, they are available in different foreign languages. Plus, such software will let you customize the dashboard using different templates.
Responsive Customer Support
You can get the most out of the live chat support option on any mobile-friendly crypto tax software platform. Twitter is another way to connect with them faster. They may even have a YouTube channel to help you with tutorials.
Their support desk allows you to make support tickets while letting you track their status. Also, there’s a FAQ section available to help you with any technical queries.
Robust Security
You can register and use mobile-based tax software anonymously. The two-factor authentication, in addition to the API encryption, is all you need for robust security. They alleviate the need to access exchanges and let you develop and restore trade backups.
Their server stores all your data securely and allows the calculation of user statistics without using personal data.
Cons of Mobile-Based Crypto Tax Software
Locking of API Integration At Some Levels
Integrations using APIs are not always made available by mobile-based crypto tax software. Most exchanges are available at the Premium level subscription plans, but some are available only at the VIP level.
Factors To Consider When Choosing The Best Crypto Tax Software
It would be best to consider multiple factors while choosing the best crypto tax software.
Given the intricacy of crypto tax calculations and reporting, it’s crucial to pick an ‘all-in-one’ software with a simple user interface, comprehensive features, and reliable customer support.
Thus, when selecting the best crypto tax software, you must consider cost, fee transparency, exchanges and wallet integration, compatibility, versatility, and customer support service.
So, let’s dive into the details of each of these factors of consideration:
1. Integration/Versatility
When choosing a crypto tax software, ensure it extends support for the most popular exchanges, tokes, and stablecoin. Doing so will enable you to track all your crypto income and activities under one roof, no matter if you invest in different crypto assets.
The hassle involved in switching from one platform to another to calculate crypto taxes manually on tokens that software doesn’t support can be daunting. This is where choosing a free plan with versatile crypto tax software can help.
It will let you explore more crypto trading opportunities while reducing your stress of computing tax reports for the tax year.
Choose a versatile crypto tax software that offers multiple integrations with exchanges and wallets. Ensure the software offers such integration while resembling the taxation standards in your country.
2. Security
As crypto tax software handles all your investing activities and records, choosing a highly secure and reliable one is crucial. A legitimate and trusted crypto tax software will ensure optimal safety and protection of your data and always provide accurate, precise reports.
Make sure the crypto tax report software can prevent any form of discrepancy in your crypto tax reports. You can get a more comprehensive insight into the reliability of the software with the help of user reviews.
3. Cost & Transparency
You can compute your capital gains tax liabilities, generate reports, and file relevant tax forms with the help of crypto tax software. The pricing of such software can be worthwhile if you can save time and effort.
Also, the cost of the tax software is only justifiable when you can calculate capital gains and losses accurately and perform tax reporting with its help. To determine whether the tax software is worthwhile, compare its cost with its features and benefits.
When selecting a crypto tax software, check its pricing plans. See if the pricing it offers is worth the features it comes with or not. Also, choose the platform that won’t surprise you with any hidden or additional costs that weren’t a part of the pricing plan earlier.
4. Customer Support Service
Another crucial factor to consider while selecting crypto tax software is customer support. In case of any troubleshooting or queries, having 24/7 access to the software’s customer support team can be beneficial.
Choose the software that gives access to online resources like troubleshooting guides and FAQs. See if the software has contact information like an e-mail or phone number to connect and interact with their representatives. Software with a live chat option can be a cherry on top.
You need to understand that some software may offer only e-mail support or online resources, while other tax software may provide live customer support. You must review the preferences and pick a software tool that best fits their customer support needs.
5. Automatic Imports
Many crypto traders find it convenient to use crypto tax software because it seamlessly imports transactions and trading records from exchanges and wallets.
One of the main reasons why traders use crypto tax software is because they won’t have to record and report every transaction data manually. Thus, picking a crypto tax tool that supports the application or platform where you trade or exchange crypto coins is crucial.
6. Flexibility
Today, the market is full of numerous cryptocurrencies for trade. Make sure your crypto tax solution can integrate with every other popular token. So, even if you invest in multiple assets, including cryptos, you can still calculate capital gains taxes for all of them.
If you seek optimal user experience, switching from one app to another for adding up taxation manually won’t be ideal. No matter if you only invest in a single crypto asset for now, using flexible, trusted crypto tax software will enable you to switch seamlessly.
7. Reliability
Tax calculation errors can be pretty costly and result in significant penalties. You can even be charged with tax evasion if the IRS discovers any errors in the tax reports you file. Choosing trustworthy crypto tax software with an excellent track record of generating tax reports is therefore crucial.
Before deciding to use a piece of software, read user evaluations. Learning from other users’ perspectives will help you determine how dependable a piece of software is.
Conclusion
For every cryptocurrency transaction, you’re obliged to pay crypto taxes. To pay crypto taxes now, you must organize all tax documents, prepare a report first, and go for tax filing. This is where the best crypto tax software can be of help.
Not only does it calculate capital gains and losses correctly, but it also generates tax reports by automatically syncing multiple exchanges and wallets within a few minutes. Given the increasing number of software available in the market, deciding the best one may seem daunting.
We have outlined the most worthwhile options to simplify your tax solution. Every solution and tool here has its pros and cons. While some tax software may provide tax loss harvesting, other tax software may offer international tax reports.
Also, the software’s cost-whether a free plan or a paid one – influences your decision. No matter which software you pick from our recommended list, as long as you have access to reliable crypto tax software, you won’t have to worry about federal taxes and tax report generation.
1. Calculate crypto gains and losses.
2. Fill out IRS Form 8949.
3. Add 8949 totals to Schedule D.
4. Include crypto income.
5. Finish the tax return.
The leading tax software options for managing your crypto taxes include Accointing, Koinly, TaxBit, TokenTax, ZenLedger, and BearTax. These platforms excel in syncing transaction data from numerous exchanges, providing comprehensive profit and loss reports, as well as generating tax reports, making them essential tools for cryptocurrency investors.
Consequently, it's essential to record your cryptocurrency sales information, such as the purchase amount and date. Generally, these transactions are reported using Form 8949, Schedule D, and Form 1040.
Reporting Cryptocurrency on Your Taxes in 5 Easy Steps
1. Calculate your cryptocurrency gains and losses.
2. Fill out IRS Form 8949.
3. Transfer the totals from Form 8949 to Schedule D.
4. Report any cryptocurrency income.
5. Complete the remainder of your tax return.
