Tax laws and filing obligations may vary from country-to-country, state-to-state, and even city-to-city, but there are many tools that work worldwide to help you. In preparing to file your taxes, you would first need to have good records of all your crypto dealings to determine the types of taxes you owe and how much. The tax tools below can help you keep records of your crypto transactions, calculate your tax liabilities, minimize taxes owed, and prepare your filing. They are especially useful for those frequently trading many cryptocurrencies on multiple exchanges.
While tax laws on cryptocurrency vary by jurisdiction, there are many useful tools to help you calculate crypto taxes, lower your tax liabilities, and simplify your filing – no matter where you are. Many of them work globally, supporting tax forms of multiple countries, and can import data directly from all major crypto exchanges.
Crypto Tax Tools
Beartax is a cryptocurrency tax service with audit support. You can consolidate trades across over 40 exchanges and calculate capital gains. The platform is tailored to individuals, CPAs, and enterprise-level accounting firms.
Bittax is a tax filing platform which offers up to 3 calculation methods to optimize your tax results. You can import your wallet addresses and exchange data to calculate your taxes.
Blox offers cryptocurrency accounting, tracking and management tools, aimed at clients such as crypto businesses, asset managers, mining operations, crypto funds, and VCs. It also offers specific tools for mining operations.
Cointracker is a cryptocurrency wallet tracker and tax calculator that provides full tax reports for four countries and capital gain reports for all countries.
Cointracking analyzes your trades and generates real-time reports on profit and loss, realized and unrealized gains, and others for tax preparation. Data can be directly imported from eight wallets, over 50 crypto exchanges, as well as 15 closed platforms such as Mt. Gox.
Cryptotax can import data from over 20 exchanges. It offers country-specific tax reports which can be generated in over 30 local currencies.
Cryptotrader supports 26 cryptocurrency exchanges. It has partnered with Turbotax, a leading U.S. tax preparation platform, so your data can be directly imported into Turbotax software for e-filing.
Koinly helps you calculate cryptocurrency taxes and minimize taxable gains in over 100 countries. Data can be directly imported from 33 exchanges, five wallets, and six blockchains.
Tokentax accepts data from every major cryptocurrency exchange and helps you calculate your crypto taxes and file your full return.
Zenledger also works with all major exchanges, cryptocurrencies, and fiat currencies. It is an official Turbotax partner so your data can be automatically imported into the popular tax preparation software.
Some of the tools above are also discussed in our articles on portfolio tracking tools and tax calculation tools.
Taxable Transactions and Filing
Once you have all of your crypto records on hand, you can either take them to a tax accountant who can help you file your taxes or use a tax preparation software to do it yourself. For U.S. filers, there are many software products, including the aforementioned Turbotax, to help you file your taxes and claim applicable deductions and credits. Digital asset exchange platform Coinbase described in a nutshell:
All crypto sells, conversions, payments, donations, and earned income are reportable by U.S. taxpayers.
Not all crypto transactions are taxable, however. Some examples of non-taxable events include donating cryptocurrencies to a qualified tax-exempt charity, buying crypto with cash and holding it, and transferring cryptocurrencies between wallets.
A tax preparation software usually takes care of evaluating which transactions are taxable. It usually asks questions about your crypto earnings and transactions, then inputs your answers into relevant tax forms. However, these questions can be vague and some software may not provide enough explanation for you to accurately answer them, potentially resulting in errors on tax forms. In addition, even if your tax filing was accepted, tax authorities could ask you to file amended returns or pay back taxes years later, as did the U.S. Internal Revenue Service (IRS) in its recent letters to crypto owners.
Most software aims to help you lower your tax liabilities, such as through capital loss deductions, as crypto losses can be used to offset other types of capital gains or income.
A survey by personal finance firm Credit Karma shows that the number of taxpayers who reported short-term capital losses from cryptocurrencies in the first month of this year jumped 521% year-on-year. However, the company additionally found that the number of people who would not declare their crypto income also increased.
Refunds and Payments in Crypto
If you are due a tax refund, you may be able to receive it in cryptocurrency. Refundo, a provider of tax-related financial products, has been helping U.S. taxpayers receive all or a portion of their federal and state tax refunds in BTC. The platform works with a number of leading tax software such as Turbotax, Taxact, Credit Karma, and H&R Block. Refunds are sent directly to the taxpayer’s wallet. In April, the company partnered with payments provider Bitpay to enable refunds to be sent through Bitpay’s payouts.
A growing number of cities and states worldwide are starting to accept cryptocurrencies for tax payments. The Swiss cities of Zug and Chiasso and the U.S. state of Ohio, for example, are already doing so. Ohio accepts both bitcoin and bitcoin cash for payments of 23 types of taxes through Bitpay. The state of New Hampshire has approved a bill to allow tax payments in bitcoin, and the Canadian city of Richmond Hill, Ontario, has announced that its residents will soon have the option to pay their property taxes in the digital currency.
Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or as a recommendation, endorsement, or sponsorship of any products, services, or companies.