Softwares that are programmed to calculate and analyze one’s crypto tax footprint are on the rise.
These tax preparation softwares carefully evaluate your crypto history through a calculation based on one’s earnings and existing transaction history.
However, many Bitcoin tax softwares measure a person’s crypto tax by asking the user questions about their virtual currency dealings.
Questions, sometimes hazy and obscure which the software, in particular, may not provide an accurate reason or explanation for you to answer them meticulously as required.
As a result, plausible errors might arise in one’s tax form.
This could raise eyebrows at the IRS (Internal Revenue Service), where repercussions might see you filing corrected returns or repayment of taxes for prior dealings.
The majority of these softwares intend to guide you to lowering tax liabilities through ways such as capital loss deductions.
Crypto losses can result in offsetting other types of income or through capital gains.
There is a large number of cities that now accept some form of cryptocurrency to make tax payments.
Some states in the USA like Ohio, accept Bitcoin and Bitcoin Cash for payments of almost 2 dozen types of taxes using Bitpay.
A city in Ontario has given its residents the option to use a digital currency to pay property taxes.
If one resides in the United States, the options are furthermore boundless as the bitcoin tax softwares are tailor-made for you.
Coinbase, one of the leading exchange platforms describes itself as, “All crypto sells, conversions, payments, donations, and earned income are reportable by U.S. taxpayers.’’
A survey conducted by the firm Credit Karma showed that taxpayers who reported losses increased year by year.
Additionally, the firm found taxpayers who did not declare their cryptocurrency income also increased.
In conjunction with the tax software, there are certain digital tools that assist the taxpayer by filing, maintaining and preparing your entire cryptocurrency imprint if required.
Accommodating concerns for hardcore users who trade frequently across multiple exchanges.
Here are a handful of services that are bound to reduce your crypto-related stress
Beartax
- Offers audit support with its cryptocurrency tax service and is tailored to meet the needs of certified public accountants to enterprise-level accounting firms.
Bittax
- Offers upto 3 different methods to calculate and optimize one’s tax results.
- Wallet addresses can be imported for precise calculations.
Blox
- Offers specific tools for cryptocurrency tracking, managing, accounting.
- Aimed at businesses that revolve around crypto funds, venture capitals, asset management, and mining operations.
Cointracker
- Offers wallet tracking and calculating complete tax reports for 4 countries and capital gains for all countries.
Cointracking
- Offers scrutinization of trades and generation of reports on profit and loss in real-time, realized and unrealized gains for tax preparation.
- Importing of data from 8 wallets and over 50 crypto exchanges inclusive of 15 closed platforms.
Cryptotax
- Offers importing of data from over 20 exchanges and tax reports generated specifically for a particular country in over 30 local currencies.
Cryptotrader
- Offers trades across 26 crypto exchanges. Partnership with the leading U.S. tax preparation platform, Turbotax.
- Customers’ data can be imported to the turbotax software directly.
Koinly
- Offers calculation of crypto taxes, minimizes taxable gains across 100 countries.
- Direct importation of data from 33 exchanges, six blockchains and 5 wallets.
Tokentax
- Offers compatibility with every major player in the cryptocurrency exchange and assists in the calculation and filing of taxes.
Libratax
- Offers calculation of capital gains and losses by analysis of all crypto-related activities on their clients’ behalf.
- Directly able to import data to exchanges such as Coinbase, Bitstamp and others.
- Accepts a number of altcoins along with other cryptocurrencies.
- The first 500 transactions are complimentary while the premium version allows recording up to 5000 transactions and downloading of tax reports.
Zenledger
- Offers automatic importation of data into Turbotax as it is an official partner making the integration seamless.
- Also works with the major cryptocurrencies and major exchange institutions.
- Zenledger does offer a starter’s subscription which includes the processing of up to 500 transactions not exceeding $50,000 in value for $149.
Crypto Debit Cards
Apart from bitcoin tax software, there are other ways to make bitcoin transactions in the real world.
Another tool that drastically expands the usability of digital currency in the traditional payment space is the Crypto Debit Card.
It’s an infantile fintech product that bitcoin enthusiasts have been waiting for.
Using a crypto debit card lets users search through numerous records of their transactions that are held in an existing system by somewhat traditional means of backtracking.
Bitpay, the secure crypto payment merchant launched their debit card.
The partnership is a tie-up with Visa, where users are given a prepaid Visa card that is linked to a cryptocurrency wallet.
Instant conversion is supported from bitcoin to bitcoin cash, U.S. dollar and fiat currencies. However, it is for U.S. citizens only.
There are a few other debit crypto cards on the rise, mainly in the U.S. but other countries are catching up.
Wirex for the European customers. Revolut for the British, that offers up to 1% cashback for payments made with its card.
Until these new modes become more open and accepted by the general public as an alternative.
Cryptocurrency will be in its own league, existing virtually online.
For now, the right Bitcoin tax software can do a polished job in assisting one’s crypto content.
Yes, with the sudden outburst of cryptocurrency management software, one is spoilt for choice but do make sure the software you choose has your best interest at heart.