Intro to Paying Taxes in Crypto Trading
In this article we’ll answer questions like, what are taxes? What software can you use to calculate your crypto trading taxes? Why you should use a software to calculate your crypto trading taxes? And also, what are the differences between the available crypto trading tax tools?
What is a tax?
A tax is a mandatory financial charge on income, capital gains or property. Taxes are used to fund various public expenditures. Tax rules are different for different countries and this also apply for tax rules regarding cryptocurrency trading. In this article we help you pay taxes in the most convenient way.
What are Tax Softwares for Crypto Trading?
A tax software’s main purpose is to help you calculate your tax. In addition, they keep track of your trades and balances from different exchanges or trading platforms.
- Calculate tax and track all your trades
- API for automatic updates from your trades
- Charts and Trends from cryptocurrencies
- Public Portfolio. You can see other peoples portfolio and make yours visible for the public
What crypto tax software are there?
There are: Cointracking, BitcoinTaxes, CryptoTaxPrep and LibraTax.
Cointracking specializes in tracking and reporting services for crypto businesses and traders alike. It offers a wide range of products for its clients, including trade statistics, prices, reporting tools, balance calculations, and tax reports. You can choose to automatically upload trading history via an API from all common crypto trading platforms. The main gist of the website is the ability to have a complete report and even budget prepared for you. It also means that tax calculations will be accurate. You can check out the demo below to get a better picture.
Apart from standard reports, you also have charts analysis tools, which act as trading analysis as well. As for the tax calculations, all positions are shown transparently, as well as the calculations made. The platform supports many different countries, including US, Europe, and Asia. You have the option to use services for free while paid plans (Ultimate and Pro) have many additional features. Free accounts don’t have tax reporting as part of their account. Cointracking has both wallet import and exchange import from almost all exchanges including Binance, Bitfinex, BitMEX and more. CFD trading platforms like eToro and Markets aren’t supported.
BitcoinTaxes is quite different from Cointracking, since it offers tax services only. It provides help for traders originating from US, Canada, Australia, Germany, and United Kingdom. You have the option to import your transaction history and balance form major exchanges, such as Coinbase, Gemini, Circle, Bitstamp, BTC-e, Bitfinex, Kraken, or CSV. The same service is available for the online wallet as well, which saves time from creating a new table by yourself.
The company offers tax models based on FIFO, LIFO, and average costing, which is flexible enough for most systems. The platform also has a competitive advantage over its reveals in terms of its partnerships with accountants. You have the opportunity to work with your personal tax advisor though a program called “Tax Accountants”. You can check the platform out in the snapshot below.
The website does not require any sort of personal information from you nor are you obliged to provide scanned documents. It is thus important to note that, although it provides services, the platform itself does not prepare tax reports for you.
CryptoTaxPrep has several programs available for its clients. If you engage in crypto trading operations, you should definitely consider this platform for your taxes. The company offers accounting, bookkeeping, and tax reporting services, organized in plans.
There are overall four major plans to choose from, them being Starter, Base, Premiere, and Platinum packages. Each of these varies in terms of services available, with the main difference being support of investment reporting and tax reporting forms creation. CryptoTaxPrep works only with US customers and is licensed by Certified Public Accountants.
You can report any sort of cryptocurrency in this platform, as rules are practically same for all coins. You don’t need to provide any sort of scanned documents, even when purchasing plans or doing tax reports.
LibraTax comes from the company called Libra Services and is a platform dedicated to crypto tax reporting and form creation. It works with several platforms in terms of your records and market trends. These platforms include Coinbase, GDAX, Bitstamp, BitGo, Blockchain.info and Bitcoin and Ethereum blockchain transactions.
It uses a spreadsheet to show all records and to create the US Tax Form 8949. Its services are free, without any costs attached to it. It works with mainly United States, Europe, and Asian countries, while values include several fiats. You don’t need to provide any personal details or scanned documents.
Why you should use a cryptocurrency tax software?
You should use a cryptocurrency tax software since it will save you a lot of time. In addition, it will help you to keep track of your trades over multiple trading platforms and also you can keep track of your tax and trades throughout the year and not only on the summary in the end of the year. We ourselves found cointracking to be the best.
Conclusion to Paying Taxes in Crypto Trading
In this article we handled a few different way to simplify your taxes on crypto trading. We definitely think it’s worth the cost to get a software to help you for this, otherwise you’ll have to do time consuming calculations. Depending on how many trades you have per year, you can choose between the different price packages.