How to Get Your Taxes Done Quickly with Crypto Tax Software
Let’s face it, tax season is our least favorite time of year. No one hates taxes more than me. Especially trying to figure out your Bitcoin, Ethereum, Litecoin, Chainlink, and other cryptocurrencies transactions many times over. Further, I did not want to OVERPAY my taxes! This is where Bitcoin Tax Software comes in. Cryptocurrency tax software that saves you hours of work and stress.
I’ll cover some [non-professional] nuts and bolts with cryptocurrency tax, what I’ve learned, which software you should use without breaking the bank…
…and the SAVE 10% at the end of the article.
I believe this is the best crypto tax software of 2021 and beyond be it, professional traders, to novice newbie users.
Over the years crypto taxes has been one of the biggest challenges for virtual currency calculations. Especially newbies.
Most do not realize it is a taxable event if you have ever purchased and then sold Bitcoin off of cryptocurrency exchanges, namely Coinbase, Binance, BlockFi, or Uniswap, as an example.
Once you exchange it (create any kind of transaction) for another crypto (swap for Bitcoin to Ethereum), or sell it (buy a coffee with your Bitcoin), it is a taxable event.
With crypto tax software, the virtual currency time of sale from cryptocurrency exchanges is automatically calculated.
It’s a dream come true that didn’t exist in the last Bitcoin bull run of 2017.
Further, some crypto traders literally have thousands of cryptocurrency transactions causing a big headache to figure out your income tax rate and let alone filling out the complex IRS tax forms.
Disclaimer: No information in this article constitutes professional tax advice as I am not a tax professional. This article is meant to be informative only based on personal experience. You should consult a certified CPA or tax professional for laws and regulations in your area. Also, any links in this article may be affiliate links which means at no cost to you, we receive a commission that helps support our blog. You will however receive rock-solid information and 10% off when you use our link. Thank you!
Cryptocurrency Short-term Captial Gains and Long-term Captial Gains
We are used to stocks that use short-term capital gains and long-term capital gains. This holds true for crypto but the difference is the IRS considers crypto a “property,” not a real currency.
We are used to an ordinary income tax for some states. Many are used to thinking about tax returns. But, if you’re getting a tax return you didn’t work hard enough to make a real change in your life.
Paying Crypto Taxes is a Good Thing
It’s a blessing to have more capital assets that qualify for taxable income! Celebrate it. This means you had some flipping awesome crypto transactions (I hope)!
I know you don’t want to hear it. I feel it’s theft too but we can’t change that.
We can, however, stay out of jail and ensure our mindset is positive.
It does not matter how much money you spend on crypto or any amount of money that you spent on any exchange.
If you’ve ever used crypto on an exchange, your information has been reported whether you know about it or not.
Many have learned this the hard way. That being said, I am not a licensed tax professional. My main goal is to educate so you can then talk to a tax professional having some background knowledge and an awesome tool to help you get the job done much easier.
How to not overpay your Bitcoin Tax by using Crypto Tax Software
Problem: I was looking for a solution so that I would not overpay on taxes. Remember, the exchanges must report their users to the IRS.
So, if you fail to report you will likely get a notice that basically indicates that hey, we noticed you’ve done some cryptocurrency purchasing and or trading, and we want xxxx dollar amount…and your unborn child (j/k…although in today’s political climate that may not be far off).
Don’t worry, the IRS isn’t that good. They did not do any math for you and say this is exactly what you owe.
They don’t even know necessarily what you’ve done as far as buying and selling.
It’s extremely difficult to track which is why it’s extremely difficult to do crypto taxes. You can however write your congressman.
IRS Instructions for cryptocurrency transactions are Complicated
The records for your cryptocurrencies are extremely difficult which is why you need help. Instructions from the IRS are confusing. The tax treatment they give virtual cryptocurrencies and the fact that they deem it property when it’s a currency is absurd.
The IRS is not “tax professionals” they are just auditors.
Their main job is to get as much money from you as they can. They’re going to give you a letter about how much they think you should pay. Then, you can either bend over and take it or give it to them.
Plug and Play Tax Software for Cryptocurrency Keeps IRS off Your Back!
If you want cryptocurrency taxation to be less painful…look for solutions like I did, where you can get plug-and-play software.
This helps automate the entire process. Or, you can hire a CPA to manually calculate it but you will still need to sit with them and tell them what you did. The easiest and cheapest way that I’ve found is with is Cryptotrader.Tax.
Now, I’m just giving you my overall experience. I will have a link below and it gives you 10% off if you do want to use this for your crypto tax trades.
What does CryptoTax Cryptocurrency Tax Software Do?
Your crypto trading software figures out the capital gain and loss basis. It’s the perfect fix for virtual currency transactions without spending hours and hours calculating and researching the buy/sell cost basis.
Any taxpayer will be elated to see their short-term and long-term capital gain cryptocurrency taxes automatically calculated. The tax rate calculated will be up to your other software like Turbo Tax or a licensed CPA.
Instantly Calculate your Crypto Trades
Virtual currency is one of the most complicated income tax policies to date. It automatically gathers your investor data for tax purposes and looks at a cost basis, which includes fees, and sale rates. It really is a plug-and-play software with some slight tweaking at the end especially if you’ve swapped between several exchanges. Overall it saved me roughly 60 hours of work for my trades.
This software plugs in all of your trades from Coinbase, for example. It’s very, very simple, and it automatically connects to your exchange. Then, it imports all of the data so you don’t have to manually punch in anything.
Getting set up with CryptoTrader Tax Software
Obviously, create an account (don’t forget -save 10% when you click on a banner from this page). Again, it’s a great return on investment with how many records review and in time especially this will save you.
It will ask you a few questions: What account should we get connected to? Then it will download a report for you.
You’re connecting to, For example, Coinbase, Bitstamp, Binance, Gemini, HitBTC, Exodus, Huobi, and other popular exchanges. There’s a certain amount that you can even do for free.
It has a cash app as well.
If you’ve ever purchased Bitcoin, sold Bitcoin, traded Bitcoin, anything like that for various purposes, you will get a Bitcoin Tax. If you held it for less than a year, this is a short-term capital gain or loss and taxed differently than a long-term capital gain (over a year) tax rate.
What is Your Cryptocurrency Tax Bracket Calculation?
Okay, so you’re looking to get a report on your taxes. This is by far the easiest way to determine what tax bracket you will fall into. You will get your Bitcoin and cryptocurrency investment sales and losses easily.
Simply use the API function or log-in option and plug it into your exchanges. Just log-in. It’ll allow you to download a report. Then you can plug it into the software here. The services are incredible
It will automatically be based on your jurisdiction and on your tax bracket. It’s going to tell you how much you owe and calculate the short-term gains and long-term gains and losses per trade.
It will give you everything that you’re legally required to report and generate out the tax form 8949.
Instant Crypto Tax Forms Based on Time of Sale
From here it combines it into a PDF so you can print it out. Instantly you have beautifully laid out tax forms. You can print it, keep it, mount it as a trophy…Or, you can send it over to your tax attorney CPA if that’s who does your taxes which makes it extremely simple.
Trust me when I say you do not want to deal with this with the IRS because they don’t have a clue on what they should be asking. Their job is not very clear to them because the IRS policies are so confusing and vague.
There’s a lot of ambiguity, with the laws around taxation and crypto.
Best Crypto Taxation Software of 2021 Integrates with Top Rated Tax Softwares
Crypto Tax Software automatically integrates with TurboTax, Tax Act, and with H & R Block.
So, if you do your online taxes with one of those software’s you can make and upload this prefilled form using CryptoTax.Tax.
It also covers International. So, you know, each law is different. I’m not a tax professional at all but I will say that each country has its own laws for how it calculates your crypto trades.
Again, the IRS views it as property. Other countries are different and view it as a currency.
Discover Ways to Optimize Your Trades for the Next Year Saving You Money
Saving on your taxes kind of goes into the tax-loss harvesting. So, if you are a serious trader or a day trader, it kind of gives you the best ways to approach your trades in the future so that you can minimize taxes moving forward.
It will give you an overview based on your trading style or based on the number of trades that you do in a year.
It may be beneficial for you to risk tax-loss harvesting. And it sort of sets up a little roadmap or a guidance system for you in the software, because the software is built by tax professionals,
It’s a real need in the market for something like this so it’ll sort of giving you a roadmap. By tracking and analyzing your data, you will see what influence your trading over the next year maybe.
Even if you’re just buying and selling and you’re holding, you want to be able to know exactly what you’re doing in case the taxman comes and knocks on your door.
Our #1 Recommended Tax Software: Cryptotrader.tax
I landed on Cryptotrader.tax after having researched several others before I actually went with this one. The others were a lot more expensive.
We’ll take a quick look at the pricing here, but this offer is just super easy. You plug in the API key and or username or password for your main changes and it just imports everything. Super good.
They offer tiered packages. So, the bottom tier allows you up to 100 trades, provides a free report, and includes customer support. Further, you can go in and do unlimited revisions without an issue.
Once complete, the software will file the form for you.
Unsure of the software? Here are some Customer Reviews
And here’s the kicker — it’s extremely affordable for what it does! Take a look…
Cryptotrader.tax Packages Overview
Up to 100 Cryptocurrency transaction Trades • Only $49/yr
This is a no-brainer, time savings, IRS off your back cost of just $49 per tax season so as per filing year. This price is if you’ve made up to 100 trades.
Remember, a trade is anything that was initiated as a transaction. Your sales cost minus your cost basis using time-stamped software to determine your crypto real-time cost.
1500-5000 to Unlimited Cryptocurrency transaction trades Packages • $49-$300 range
Heavier trading of 1500 trades 5000 trades or up to an unlimited trades package and they’re basically looking at $49, $99, and up to $299 unlimited.
The Pitfalls of Calculating Bitcoin Tax Yourself
Okay, so you’re confident and your like – screw it, I got it.
Okay, calculate the gains and the trade and the price swings and how much I actually made over this period of time, and how it correlates to three months down the road.
That’s not only the biggest headache but if you miscalculate you could be significantly overpaying.
Trust me when I say it’s worth it to pay the $49 bucks or the $99 bucks. I didn’t make that many trades. So I just use the basic $49 did everything that I needed for myself.
I printed off the tax form and inputed it directly into TurboTax. It was everything that was needed.
It’s well worth it.
Tax Trading Cryptocurrency Software with a Full Money Back Guarantee
Crazy but if you are dissatisfied for any reason, they offer a full money-back guarantee!
You can also live chat with a tax professional if you have any questions.
In case you were still nervous, this means it’s a legitimate business.
CryptoTax Software Starts For FREE
What!? Yes. You can get started for free! Test it out on a trial and make sure that you like the interface.
Then if you do decide to keep it, there are discounts for doing it for multiple tax years and so on.
I did find it to be easy in the cheapest
Save 10% Off – Click the Picture Below for Instant Crypto Tax Software Coupons!
Best part! Use the link down below (picture), and receive an awesome 10% discount NOT available to the general public.
Plus, save more when you decide to go multi-year if you like it the first year you’ll get even a larger discount
Remember, the IRS wants the cut and they are targeting cryptocurrency users. Don’t be that guy/gal.
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Discover how I earned more interest in 1 month than 10 years in my Traditional Savings Account:
Traditional Savings Accounts Versus CryptoSavings Accounts with 8.6% – 10% APY!