What is the best crypto tax report app for US customers a US flag

What is the best crypto tax report app for US customers?

Welcome; this article will present the best crypto tax software report app for US customers. 

A crypto tax report app for US customers should have support for

  • Form 8949

  • Form 1040 (Schedule D, Capital Gains, and Losses)

  • Form 1099-MISC (Miscellaneous Income)

Read more below about these specific tax file forms applicable to US customers.

What is a crypto tax report app?

A crypto tax reporting app is an online desktop application where you can upload all your transactions, and the software will automatically calculate all your gains and losses to complete the tax file for you.

Best crypto tax report app for US customers

In the table below, we have listed the best crypto tax software for US customers. However, if you live in the USA and are about to file taxes for cryptocurrency transactions, you probably need one/some of the following forms and documents.

  • Form 8949 Have transactions that qualify as a capital gain or loss? Those go here and can be filled out using your transaction reports from various exchanges.

  • Form 1040 (Schedule D, Capital Gains and Losses) Commonly referred to as just Schedule D, this is the summary of your capital gains and losses.

  • Form 1099-MISC (Miscellaneous Income) This Form is used to report rewards/ fees income from staking. Earn other such programs if a customer earns $600 or more in a tax year.

Crypto tax Software Cointracking logo
Cryptotrader.tax white logo
Crypto trading tax software Koinly logo

See the full comparison in our article, Koinly VS Cointracking.

How to automate crypto tax reporting with a software?

If you are about to use crypto tax software to report and file your crypto taxes, you must fulfill those six steps where step 1-3 is common for all countries while step 4-6 are specific for the US since they include specific US crypto tax forms.

  1. Understand what a taxable event is 
  2. Aggregate all your historical crypto transactions
  3. Calculate your gains, losses, and income in USD
  4. Filling out the IRS Form 8949 for all taxable events
  5. Transfer totals from your 8949 form to your Form 1040 Schedule D
  6.  Fill out any remaining cryptocurrency income on Form 1040

How to legally avoid crypto taxes 2021 in the US?

Is there any way to legally avoid crypto taxes in 2021 for US customers?

If you’re considering selling any crypto investment, make sure you understand how taxes for crypto work.

Investing in crypto usually mean you are required to pay taxes to the IRS if you live in the US.

However, if you meet the rules for long-term gains tax treatment, there’s a way to lower your tax bill (or even legally pay no taxes on your earnings from cryptocurrency). 

What is long-term gains?

There are two types of crypto gains taxes:

  • Short-term gains
  • Long-term gains

If you hold your crypto investment for a year or less before selling it, you will have a short-term capital gain. Your earnings will be taxed at your ordinary income tax rates, ranging from 10% to 37%.

The best deal on your tax bill comes when you hold your crypto investments for over a year because the long-term capital gains tax rules are the key to unlocking the 0% tax bracket on your crypto profits.

How to legally avoid crypto taxes 2021 in the US?

The secret to legally avoid crypto taxes in 2021 is to make your way into the lower long-term capital gains tax bracket.

You need to pay attention to your crypto holding period and on your taxable income.

Long-term capital gains grant you access to the following tax rates

  • 0% – Taxable income up to $80.000
  • 15% – Taxable income is $80,000 or more but less than $441,450
  • 20% – Applies to the extent that your taxable income exceeds the thresholds set for the 15%

To qualify for these favorable tax rates, you must hold your crypto investments over a year before selling them.

Also, for the most accurate information, see the capital gains on the IRS webpage. Remember, that those number presented here is for a single household and will be different if you are a married household.