How to calculate taxes on your Bitcoin profits in 2020
There are two things certain in life and one of them is taxes. Unfortunately, it also applies to Bitcoin holders. Here are 5 useful cryptocurrency tax calculators that help you file your Bitcoin profit taxes.
As cryptocurrencies become more popular and their adoption rises, governments worldwide are ramping up their efforts to tax them. In the U.S., the Internal Revenue Service (IRS) has named cryptocurrency a top priority this year. Not only has the agency sent out over 10,000 letters to remind crypto owners they must pay taxes, but its main tax form used by over 150 million U.S. filers now includes a cryptocurrency question. Noting that “Voluntarily compliant taxpayers deserve to know that noncompliant taxpayers are at risk,” the agency declared:
“Virtual currency, also called cryptocurrency, will remain an important focal point for the IRS in 2020.”
For crypto owners who want to calculate how much they owe in taxes, there are many tax preparation platforms with a crypto tax calculator to help them minimize their tax liabilities and claim all the deductions possible. Most online crypto tax calculators require you to import your transaction data from exchanges or wallets to calculate your tax obligations. They will also generate various reports to help you with tax reporting and filing. Some have even partnered with leading tax filing services such as Turbotax. Below are some popular platforms with a cryptocurrency tax calculator.
1. Crypto Trader Tax
Crypto Trader Tax by Coin Ledger is a tax reporting platform with a built-in crypto tax calculator. It integrates with all major crypto exchanges, including Coinbase, Coinbase Pro, Bittrex, Bitstamp, Gemini, Poloniex, Binance, Kucoin, Kraken, Bitfinex, Huobi, Hitbtc, and Cash App. You can also import data from unsupported exchanges manually. Once you have imported your data, Crypto Trader Tax will calculate your tax obligations and generate tax reports.
The platform’s crypto tax calculator is free to use. “You only have to pay when you want to view and download your full report,” its website details. The reports generated include an audit trail report, the IRS Form 8949, a short and long term gains report, and a crypto income report. The platform also offers international support. Your capital gains and losses can be calculated in every fiat currency and your tax reports used in any country that supports FIFO, LIFO, or specific identification methods.
Four pricing levels are available on Crypto Tax Trader: $49, $99, $199, and $299. The cheapest plan allows you to import up to 100 trades. All levels have Turbotax and Taxact integration to help you file your tax returns.
Koinly is also a popular platform with a crypto tax calculator, available in over 20 countries. Similar Crypto Trader Tax, to use Koinly’s tax calculator, you need to import your data from crypto exchanges, wallets or public addresses. You can then review your transactions and generate your tax reports, which include capital gains, income and gifts, margin trades, options and futures trades, and audit logs. You can then export your transactions to tax filing platforms such as Turbotax, Taxact, and Xero.
It is also free to start using Koinly’s crypto tax calculator. “Start for free, pay only when you are ready to generate your reports,” its website states. To generate tax reports for filing, Koinly offers three plans costing $79, $179, and $399. The cheapest level allows 300 transactions.
Cointracker has been advertising its free crypto tax calculator since January. “Cryptocurrency users with up to 200 transactions in a given tax year can use Cointracker to calculate cryptocurrency taxes free of charge,” the company wrote. “This enables the majority of cryptocurrency users to seamlessly become and stay tax compliant as they transact and use cryptocurrency, all at zero cost.”
The free level comes with portfolio tracking, capital gains tax calculation, and error reconciliation. The platform also offers a more heavy-duty plan which costs $179, allows up to 3,000 transactions, and comes with several more options. There is also an “unlimited” level for which you need to contact the company for a quote.
Zenledger describes itself as “much more than just a free crypto tax calculator.” It claims to be “The most comprehensive cryptocurrency tax software on the market.” The service aggregates your many ledgers, marks the transactions to market, and allows you to categorize each transaction by use. It also integrates with major crypto exchanges and has partnered with Turbotax. Reports it generates include completed tax forms and audit reports.
Besides a free tax estimate, Zenledger offers a variety of pricing options, starting at $69, $149, and $399. The lowest level allows up to 1000 transactions and $15,000 in total asset value. Product consulting and customization service is available as an add-on at $100 per hour.
Tokentax is another cryptocurrency tax software and accounting platform with a built-in crypto tax calculator. Similar to other platforms featured above, Tokentax integrates with major crypto exchanges and allows you to manually import your trade history from other exchanges. Once your transaction data has been imported, the platform will calculate your tax obligation and generate your tax reports, including the IRS Form 8949, an audit trail report, a crypto mining, and income tax report, and an international gain and loss report. Tokentax has also partnered with Turbotax.
To use Tokentax’s crypto tax calculator, however, you will need to pay for one of the three plans which cost $65, $199, and $799. The basic plan only allows up to 500 transactions from Coinbase, Coinbase Pro and Binance. Level 2 supports every exchange and allows you to import up to 5,000 transactions. All three levels have Turbotax integration.
Do you prefer to calculate your crypto taxes by yourself?
> Read more about how to calculate taxes on your crypto profits
> The IRS has recently provided some tips which cryptocurrency owners should know before filing their tax returns.
The original article 5 Useful Cryptocurrency Tax Calculators appeared first on Bitcoin.com.