Crypto Taxes: Online Tax Software to Report Bitcoin, NFTs and Digital Currencies

This story is a part of Taxes 2022, CNET’s protection of the most effective tax software program and every part else you want to get your return filed rapidly, precisely and on-time.

If you offered, traded, earned, mined or staked cryptocurrency in 2021, the IRS desires to learn about it, whether or not it was bitcoin, ether, binance, cardano, dogecoin or another digital forex. And you’ve got solely received a couple of days left to do it — earnings tax returns should be filed by April 18, 2022.

Ever because the IRS clarified its stance on cryptocurrency in 2014, crypto taxes have been a lifestyle for many who promote or commerce digital currencies. Just as earnings on inventory gross sales are taxed as capital positive aspects, so are earnings from crypto gross sales. And crypto merchants want to doc the worth of each single sale or commerce on IRS Form 8949.

Likewise, if you happen to earned crypto as wages or from airdrops, laborious forks, mining or staking, you may want to report that as earnings in your taxes. And if you happen to’re mining crypto, there are totally different IRS kinds relying on whether or not you are doing it as a “passion” or as a part of a enterprise. 

If crypto taxes sound difficult, think about crypto tax software program that connects to exchanges and could make reporting crypto transactions in your tax return simpler. They will not essentially file your taxes for you, however they may sync up with well-liked tax submitting software program like TurboTax, H&R Block and Cash App Taxes and assist navigate the issues of crypto taxes.

Crypto Tax Software Products

CoinTracker

CoinTracker is likely one of the crypto knowledge monitoring merchandise making noise in 2022. In January, CoinTracker introduced it was partnering with CoinBase to simplify monitoring taxable cryptocurrency exercise for CoinBase customers. TurboTax has additionally lately teamed with CoinTracker to let its customers import crypto transactions.

CoinTracker integrates with greater than 300 crypto exchanges and wallets to robotically observe your cryptocurrency holdings, gross sales and transfers. The CoinTracker website boasts that it tracks 3% of the worldwide crypto market, equaling about $50 billion of crypto property.

Like a lot of the merchandise within the assortment, CoinTracker will create IRS Form 8949 for you and help with varied IRS schedules associated to crypto earnings from airdrop or laborious forks.

CoinTracker based mostly its pricing in your variety of crypto transactions. If you might have 25 or fewer transactions, it is free. A Hobbyist plan begins at $60 and consists of up to 100 transitions. The Premium plan provides up to 1,000 transactions and begins at $200.

Koinly

The cryptocurrency tax calculator Koinly at present works with 368 crypto exchanges, 78 wallets and 20 different crypto companies (just like the merchandise on this assortment.) If Koinly does not embody your crypto trade, it’s also possible to import CSV recordsdata of crypto transactions.

Once linked to your accounts, it robotically tracks all of your cryptocurrencies, identifies transfers and may even mix a number of trades into single transactions.

Koinly gives its crypto monitoring service without spending a dime, however you may want to improve to a paid plan for the tax studies, together with Form 8949. Similarly to CoinTracker, Koinly units its tax service costs based mostly in your variety of crypto transactions — $50 for 100 transactions per tax yr, $100 for 1,000 transactions, $179 for 3,000, or $279 for 10,000.

ZenLedger

Founded in 2017, ZenLedger crypto software program lets customers meet earnings tax obligations by aggregating crypto exercise and changing it into the IRS kinds and schedules used to file taxes. ZenLedger can simply export Schedule 1 (crypto earnings), Schedule D (crypto positive aspects or losses) and Form 8949 (crypto gross sales and different inclinations).

An built-in tax-loss harvesting device analyzes your transaction historical past to counsel tax saving alternatives you possibly can take earlier than the end-of-year deadline. ZenLedger additionally boasts a “Grand Unified Accounting” characteristic that compiles your whole crypto transaction historical past throughout all wallets and exchanges in a single easy-to-read spreadsheet.

ZenLedger is free for 25 transactions or much less per yr. The Starter plan for $50 will increase the transaction restrict to 100, whereas the Premium plan at $150 offers you 1,000 transactions plus assist for staking, NFTs and curiosity from decentralized finance (DeFi) actions. The Executive plan at $400 offers you all that plus limitless transactions, and the Platinum plan at $1,000 consists of the entire above plus two hours of premium
assist.

TaxBit

Funded by PayPal Ventures and different massive traders, TaxBit gives an expansive free crypto tax software program product — there isn’t any value for monitoring limitless transactions if you happen to use any of the just about 500 exchanges included within the TaxBit Network. A Basic plan at $50 per yr provides assist for exchanges exterior the community and historic information.

TaxBit’s Plus+ degree ups the protection with tax-loss harvesting options and earnings from DeFi for $175 a yr, whereas the highest degree — Pro at $500 a yr — provides a tax evaluate by a CPA.

TokenTax

TokenTax is exclusive amongst crypto tax software program — you possibly can both create tax studies for submitting your taxes your self or enable TokenTax to file your taxes for you. TokenTax gives tax submitting companies for 18 international locations together with the US.

There’s no free plan at TokenTax. The entry degree Basic plan prices $65 a yr, permits up to 500 transactions and solely consists of assist for Coinbase and Coinbase Pro. Upgrading to Premium degree at $200 a yr provides assist for all crypto exchanges, NFT and DeFi earnings, a tax-loss harvesting dashboard and up to 5,000 transactions. The $800 a yr Pro degree beefs up the transaction restrict to 20,000 and assist for the Foreign Bank Account Report and all margin exchanges.

If you need TokenTax to file taxes for you, you are going to have to pay loads. First you want to subscribe to the VIP plan, at $3,500 a yr, which incorporates up to 30,000 transactions and all of the options of decrease plans, plus superior crypto reconciliation and two 30-minute consultations with a tax professional. Then you may want to buy a submitting add-on characteristic that begins at $1,000.

Accointing

Accointing at present helps 105 crypto exchanges by way of direct API integration and greater than 300 exchanges by way of CSV recordsdata. It allows you to observe your crypto transactions and efficiency in real-time and claims to produce tax studies in 5 clicks.

Like most crypto software program, Accounting fees for its service based mostly on the variety of taxable transactions you want to report. It begins off with a free plan that features up to 25 transactions. You’ll get 500 transactions a yr for $80, 5,000 transactions for $200 or up to 50,000 transactions for $300. All ranges embody a tax-loss harvesting characteristic.

Blockpit

Blockpit says that it helps “all prime exchanges” of crypto, however solely shows logos for 17 of them on its product web page. The checklist does embody Coinbase, Kraken, Binance and Crypto.com however there isn’t any signal of Gemini or BlockFi.

Blockpit gives free service for up to 25 transactions a yr. Upgrading to its superior plan will add electronic mail assist and up to 25,000 transactions for $200 a yr. If you want limitless transactions, you may want to improve to the Professional degree, listed at 600 euros a yr (about $660 as of March 11).

CoinLedger

CryptoTrader.Tax — which can quickly be rebranded as CoinLedger — allows you to import all of your trades, add earnings information from mining or airdrops, generate tax studies and then import these studies into well-liked tax software program like TurboTax or TaxAct. The website at present advertises integration with 100 crypto exchanges.

The good factor about CryptoTrader.Tax is that each tier consists of the identical options. The solely restrictions are based mostly on buying and selling quantity. For $50 a yr you get 100 trades on the Basic degree. Upgrade to Day Trader degree to get 1,500 trades for $100. The High Volume degree will get you 5,000 trades for $200, and the Unlimited plan allows you to observe as many transactions as you want for $300 a yr.

Bitcoin.tax

Bitcoin.tax gives a price -conscious possibility for managing your crypto taxes. Import your buying and selling, earnings and spending knowledge, and Bitcoin.tax will calculate your capital positive aspects and losses and export the IRS kinds you want to full your tax return.

The service lists 21 crypto exchanges — together with Binance, Kraken, Coinbase and Gemini — that it particularly helps for robotically syncing your accounts. Trades from different exchanges will be imported with CVS recordsdata.

Bitcoin.tax is notable for its pricing, which is usually cheaper than most different crypto tax software program. All crypto tax options are included at each cost degree — the one restrictions are on the variety of trades. The Free tier permits up to 20 trades; the Premium tier permits up to 1,000 transactions for $40; Premium Extra at $50 offers you up to 5,000 trades; and Deluxe caps out at 10,000 transactions for $60. 

Bitcoin.tax additionally companions with Gordon Law to present full tax submitting companies. You will pay for a half-hour session with a crypto tax professional, or pay to have Bitcoin.tax file your taxes for you.

Bear.Tax

Bear.Tax consists of built-in assist for greater than 50 crypto exchanges and servers and gives a generic CSV add characteristic for another networks crypto merchants could use. It generates all the required IRS kinds, and gives a helpful “audit path file” that reveals each crypto transaction you’ve got ever traded or offered, plus the honest market worth on the time of any transactions.

As with CryptoTrader.Tax, Bear.Tax consists of all of its options with each pricing plan — the one distinction is the variety of trades. If you might have up to 200 trades, you should use the Basic plan for $50 a yr. For $150 a yr, you may stand up to 2,500 transactions, and for $500, up to a million (!!!) transactions per yr.

FAQS

How does the IRS outline cryptocurrency and digital forex?

Cryptocurrency is a subset of digital forex, and the entire IRS guidelines for digital forex apply equally to crypto. To the IRS, digital forex is outlined as cash that isn’t saved in US {dollars} or official overseas forex but features as a digital representation of value and works as a medium of trade.

The IRS moreover defines “convertible” digital forex comparable to Bitcoin or Ethereum as any digital forex that may act as an alternative choice to “actual” or fiat forex.

How ought to I reply the cryptocurrency query on IRS Form 1040?

The IRS positively does not need tax filers to miss the digital forex query that was added to the principle 1040 and 1040-SR tax return kinds final yr — it is proper there below your identify and handle:

At any time throughout 2021, did you obtain, promote, trade, or in any other case get rid of any monetary curiosity in any digital forex?

You don’t want to test “Yes” if you happen to solely purchased cryptocurrency with fiat forex – US {dollars} or official foreign currency – in 2021. You do want to test “Yes” if you happen to:

  • Received cryptocurrency as cost for items or companies
  • Received crypto without spending a dime that wasn’t a bona fide reward (e.g. airdrops)
  • Received crypto by mining, staking or laborious forks
  • Exchanged crypto for property, items or companies
  • Bought crypto by utilizing cryptocurrency
  • Sold cryptocurrency for US {dollars} or overseas forex

How does the IRS tax cryptocurrency?

For federal tax functions, digital forex is handled as property. General tax rules relevant to property transactions apply to transactions utilizing digital forex.

In common, if you happen to offered crypto, you may want to report like a inventory sale, together with the prices and dates if you bought and offered it. If you earned cryptocurrency as earnings or from mining (as a passion), that cash goes on Schedule 1 (Additional Income and Adjustments to Income).

If you donated crypto or earned crypto as enterprise earnings, there are totally different IRS kinds and schedules you may want to full. See the next desk for quite a lot of crypto conditions and the required IRS kinds:

Crypto Tax Situations and Forms

Cryptocurrency Situation IRS Tax Form
You offered crypto or exchanged one cryptocurrency for an additional Form 8949 and Schedule D (Form 1040)
You earned crypto from wages, airdrops, forks or mining as a passion Schedule 1 (Form 1040)
You donated cryptocurrency Schedule A (Form 1040)
You earned DeFi or crypto curiosity or staking earnings Schedule B (Form 1040)
You earned mining earnings as a enterprise or earned different enterprise crypto earnings Schedule C (Form 1040)

What does crypto tax software program do?

Crypto tax software program helps you file your tax return with the IRS. Programs usually sync with crypto exchanges and wallets to observe your purchases, gross sales and different transactions. 

At tax time, most crypto tax software program will export the assorted kinds you want, saving you the time and hassle of monitoring all of your crypto transactions and finishing IRS kinds manually. Most crypto tax software program fees cash for his or her assist with tax preparation. The quantity is often depending on what number of crypto transactions you make per tax yr.

More tax and crypto recommendation

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