Health, Wealth, and Happiness |
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“It's important to know what you want to accomplish with your investments before you actually invest.”
― Oscar Auliq-Ice
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In today's issue: Crypto taxes are complicated, but there are really only two things you need to know:
- The date, quantity, and price of every crypto asset you've bought;
- The date, quantity, and price of every crypto asset you've sold.
From there, you can usually figure out the taxes you owe (or the losses you can claim).
Things get more difficult if you're swapping, earning, borrowing, lending, or farming different crypto assets. Figuring out these taxes will flummox most accountants, and TurboTax might explode.
Today we're releasing our updated list of the Best Crypto Tax Software, with fresh rankings for 2023 based on price, versatility, and community support. Read on to discover our top picks for simplifying crypto tax.
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Our copy-and-paste crypto investing strategy continues to far outperform the traditional "Non Believer" investor, even during crypto winter. Here are the profits as of 12/31/22.
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Must Read
Today's most important story for crypto investors.
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Good news for those of you who heeded our BUY ALERT on LDO last summer! It has now passed Maker in Total Value Locked, putting Lido at the top of the DeFi list.
If you're just joining us, Lido allows users to stake tokens in proof of stake blockchains (like Ethereum) without having to actually stake. Instead they stake with Lido, which gives users tokens in return that they can sell back anytime.
This "liquid staking" is a huge innovation. As opposed to staking directly in Ethereum (difficult, expensive, and you can't get your money out yet), Lido makes it easier and safer for ordinary investors to stake small amounts of ETH.
Investor takeaway: As usage of Lido has grown, so has its token price. LDO is now up +18% since we covered it in July, even in a bear market. Stay subscribed.
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Best Crypto Tax Software, Rated and Reviewed for 2023
by Daniel Joel
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If you sold or traded crypto last year, you likely owe the government tax.
Two pieces of information are needed to track and pay the appropriate taxes to the government:
- The date, quantity, and price of every crypto asset you've bought;
- The date, quantity, and price of every crypto asset you've sold.
Tracking this information can be complicated, especially when making hundreds or thousands of trades yearly. That is where crypto tax packages come in.
These programs automatically sync across exchanges and wallets to calculate your gains and losses. They give you a final tax report that you can file with the government.
In this article, we will compare some of the best tax software for crypto available today. Our editors have rated software based on pricing, the number of supported exchanges, reviews from other customers, and social credibility.
Read on to find out our top picks for crypto tax software, plus what your fellow customers are saying about them.
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How to Do Crypto Taxes
In short: pay your taxes.
According to the IRS, virtual currencies are taxable by law. If you don’t report crypto on your year-end taxes, you’ll likely face an audit from the IRS. This failure could lead to criminal prosecution, resulting in a fine of up to $250,000 or up to five years in prison.
There’s no doubt tax law is miles behind the rapid pace of blockchain innovation. In the U.S., for example, just buying a cup of coffee with bitcoin is a “taxable event,” meaning it doesn’t function like currency. It functions like an investment (i.e., you pay tax on the gain of your bitcoin when spending it).
Crypto tax software is an essential tool as it functions as a third-party aggregator for collecting data. After purchasing a subscription plan, the software will connect to all your crypto exchanges, wallets, and addresses. It’ll then reconcile the transactions and produce a detailed gain and loss report that’s compatible with IRS guidelines.
Typically, these reports include a Form 8949, Schedule D. In some cases, the reports may also include a Schedule 1. To the untrained eye, all these software solutions look like good solutions for your tax needs. However, each platform comes with strengths and weaknesses, which we’ll discuss below.
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What’s New in 2023 (Filing Your 2022 Crypto Tax Return)
The IRS treats airdrop rewards (tokens that are dropped into your wallet, like our BMJ token) as taxable income in the year you acquired them.
Moreover, the “wash sale” rule remains a gray area for crypto investors. It may arise when a trader sells tokens at a loss and buys them back within 30 days to offset other capital gains. Wash trading is currently allowed with crypto, but this may change.
Long-term capital gains taxes range from 0-20%, while short-term capital gain taxes range from 10-37% depending on your federal income tax bracket.
Crypto Tax Software: Our Top Picks
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CoinTracker
Best for: Crypto and NFT taxes.
CoinTracker syncs all information from your crypto portfolios and uses the data to create tax forms to file your returns. The software supports more than 500 exchanges and 10,000 cryptocurrencies. It's also compatible with Turbotax and TaxAct.
A stand-out feature is the support for NFT-related trading taxes thanks to a partnership with Opensea.
Features:
- Automatically generates tax reports for each year.
- Compatible with TurboTax and TaxAct.
- An interactive portfolio that shows transactions with fees and taxable income.
- It has a mobile app for both Android and iPhone users.
- It has a 3.1 rating on Trustpilot.
Price:
- Hobbyist: $53/year
- Premium: $179/year
- Unlimited: Priced individually
What customers have to say:
“CoinTracker has functionality that (surprisingly) Coinbase does not. So that's why I started using CoinTracker: to see my unrealized returns (%). Also, their charts are easy to use. Thankful that they integrate with Coinbase and allow me to see important information about my portfolio that Coinbase doesn't.” (aMw, TrustPilot)
“Just got a notice from LifeLock that my email was found on the Dark Web from a Cointracker, hack but I don't have any emails from them warning me of a breach.” (Tim Naughton, TrustPilot)
Verdict:
We give CoinTracker an overall score of 4.0. CoinTracker is a great tool for tracking your Defi and NFT taxes. It has wide exchange integration and a reasonable price point. However, there have been privacy concerns based on a data breach at Sendgrid, its email service provider.
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TaxBit
Best For: Professional traders and enterprises in charge of clients’ crypto taxes.
TaxBit stands out from other software programs in that it’s the only one created by tax attorneys and CPAs, working alongside software developers. The software comes with an extensive electronic paper trail that backs you up in the event of an audit. TaxBit offers an extremely intuitive layout that’s fit for everyone, from novice investors to industry regulators.
Features:
- Supports over 500 exchanges and over 2,000 currencies
- Partnered with BlockFi to make crypto taxes easy for BlockFi users
- A robust dashboard that shows your asset balances, unrealized profits and losses, and tax positions
- Compatible with TurboTax
- Rated 4.0 on TrustPilot
Price:
- Basic: $50/ year
- Plus: $175/year
- Pro: $500/year
What customers have to say:
“The TaxBit app is extremely convenient and easy to set up. It’s so great to have one place to track crypto accounts. Everything from cost basis to unrealized profits to taxable gains are there at a click of the mouse. Highly recommend this product.” (Keith, TrustPilot)
“Although I wish there was more transparency regarding the escalation team’s progress, I can’t complain about the overall experience I’ve had with TaxBit so far.” (Kennedy Shaun, TrustPilot)
“Great user interface, and easy to understand and filter through data. Great online support. Easy integration with tax filing and third-party platforms.” (Chris, TrustPilot)
Verdict:
We give TaxBit an overall score of 3.5. The software supports most crypto exchanges, provides you with an immutable audit trail, and offers responsive customer support agents. However, some users find there are limited options for auto-syncing and reporting.
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CoinTracking
Best for: Crypto traders and crypto companies.
CoinTracking is a pioneer in the crypto tax space. Originally, it was a portfolio-tracking app. Currently, it performs crypto trade analysis and generates real-time tax reports. It has a live demo option to give you a feel of how the software works before paying. CoinTracking’s full service gives you access to CPAs and agents in the USA.
Features:
- Allows automatic imports using APIs.
- Two-factor authentication.
- Creates tax reports for over 100 countries.
- 2.9-star rating on TrustPilot.
Price:
- Pro: $12.99/year
- Premium: $19.99/year
- Unlimited: $16.99/year
What customers have to say:
"Not perfect, but still the best software for serious traders. It takes a little while to learn, but it's worth it if you want to get accurate calculations. Those who don't have many transactions might want to look elsewhere for a free solution." (Superpluff, Trustpilot)
"2 years ago, I decided to purchase '2-year unlimited' and recently, I decided to go lifetime unlimited. The support is great and responsive. They are very polite. The only issue is that it can take a bit of time to understand the process of importing everything and can require a lot of deleting all trades and starting fresh to figure it out, which is time-consuming. Perhaps a step-by-step mode for new users would ease people in?" (Craig Crawford, Trustpilot)
Verdict:
We give CoinTracking an overall score of 3.5. CoinTracking is a helpful tool for crypto traders and companies. It can be a handful when starting, but it's easy to use once you have a grip on it.
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Accointing
Best For: Beginner and professional crypto traders looking for robust features.
Accointing is a crypto tax reporting and tracking software that offers tools to analyze your portfolio, track the market, and produce tax reports so you can file your taxes easily. Accointing comes with an intuitive interface that’s easy to use for both novice and professional crypto traders. The software supports over 400 exchanges. It also allows you to automatically import all your crypto transactions via your wallet address.
Features:
- Supports more than 400 wallets and exchanges and over 7,500 currencies
- Print an unlimited number of reports
- Track your cryptocurrency portfolio
- Portfolio analysis tools to help you make more informed decisions
- Compatible with TurboTax
- Rated 4.0 on TrustPilot
Price:
- Free: $0
- Hobbyist: $79
- Trader: $199
- Pro: $299
What customers have to say:
“Amazing portfolio analytics to combine all your wallets and exchanges in one place! Awesome crypto tax service, too!” (Matt, TrustPilot)
“The best platform to keep track of crypto assets across wallets and exchanges. Simple to use and quick to set up. Additionally, they have great content to stay on top of news in the crypto market.” (Daniel Kohlsdorf, TrustPilot)
“I used Accointing for my German tax report. The import works well (with some manual adjustments), and the tax report is perfect with all the explanations and paragraphs. Very professional.” (Lukas P, TrustPilot)
Verdict:
We give Accointing an overall rating of 3.5. Accointing comes with an easy-to-use interface that allows you to check your portfolio in just a few clicks. This affordable software is a good middle-of-the-road option even if it doesn't have the social following (i.e., customer base) of some of its competitors.
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CoinLedger
Best for: Crypto hobbyists and casual investors.
CoinLedger claims to have over 300,000 crypto investors. The tax software allows you to file taxes for both cryptocurrency and NFTs. It also features an easy-to-use interface that allows you to import data, preview taxes, and create profit and loss reports for crypto assets and NFTs. Additionally, it integrates with TurboTax and TaxAct.
Features:
- Integrates with TurboTax
- Complete tax reports for different countries
- Portfolio tracking
Price:
- Hobbyist: $49/year
- Day Trader: $99/year
- High Volume: $199/year
- Unlimited: $299/year
What customers have to say:
“I was having a problem with my Nano X. I submitted a request for help and sincerely didn’t think I’d hear back for days. I heard back later that day and even had a back-and-forth communication with the representative helping me. They were very responsive in solving my problem.” (Jennifer Gubler, TrustPilot)
“CoinLedger's interface is intuitive, and their one-on-one chat support was immensely helpful to get all of my information organized properly. My first time navigating crypto taxes has been relatively painless.” (David Bell, TrustPilot)
Verdict: We give CoinLedger an overall rating of 3.5. Apart from importing crypto data from any platform for your tax needs, you can also monitor your losses and profits. However, the price is higher than some competitors.
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ICYMI
In Case You Missed It
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Global central banks may soon be investing 2% into bitcoin. (Premium members)
Here's what Helium has planned for its HNT token in 2023.
Why the BMJ token will kickstart the next wave of crypto growth.
The BMJ token is only the beginning.
If you want to develop, go where the developers are.
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Bitcoin Market Journal is a daily newsletter that makes you a better crypto investor. It's created by John Hargrave, Nick Marinoff, Steve Walters, Anatol Antonovici, Ben Burn, Preetam Kaushik, and Daniel Joel.
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