what to look for in crypto tax software
When you dive into the world of cryptocurrencies, having a good solution to calculate your cryptocurrency taxes is a must. As mentioned above, every action you take in the crypto world is still taxable in the eyes of the IRS, and you need to have your documents in order.
Your activity is tracked to help you submit accurate reports and avoid paying excess taxes or penalties.
Reading: Best bitcoin tax software
A good crypto tax software should be able to integrate with all popular exchanges and wallets to allow automatic data entry. If you are a professional trader, manually keeping track of all your transactions can be problematic.
You need to keep track of not only the prices, but also the dates, the number of coins or tokens you traded, and how long you kept them in your wallet.
It is also important that the software you choose can be used in your country, as taxes differ depending on where you live. the application you choose must comply with the tax standards of your country.
Even if you are not a professional trader and have a smaller number of trades per year, these tools can save you hours by adding all your trades manually.
accurate documentation out of the box
Once these data aggregators have all the data they need, they can calculate the crypto taxes you need to pay. To do this smoothly, you need to look for the best crypto tax calculator available in terms of accuracy.
Most tax software should also be able to present you with preloaded, ready-to-download documents that you can archive. should help you with more than just the infamous IRS Form 8949.
You should be able to trust it for international taxes, your audit trail, and even filing your taxes on cryptocurrency gains and losses.
The best cryptocurrency tax software will also have great dashboards to track your transaction history. From there, you should have it covered in terms of tax loss collection and other features intended to simplify your handling of taxes.
Some of these software solutions will recognize transactions between your wallets and save you from paying taxes on them. others will automatically remove duplicate transactions from your forms.
Having all of these features available also saves time for tax professionals. Some of these solutions offer software for tax professionals to help them manage taxes on crypto profits for their clients.
Some solutions offer you to hire a team of tax professionals, which could be beneficial for professional traders who don’t have time to check software reports.
Other solutions include crypto-free tax handling, a perfect solution for those looking to handle all their taxes in one place. however, it may be safer to opt for a dedicated traditional tax software solution if you need one.
reputation and safety
other essential aspects of every software that handles taxes (especially in the world of cryptocurrencies) are its reputation and security. you want to make sure you’re working with the best cryptocurrency tax software, one that’s reliable and secure.
You don’t want it to mess up your reports and have to pay fines once the irs compares your report to those submitted by crypto exchanges or worse, get charged with tax evasion.
Before you commit to a particular software, you should learn about the experiences of other users.
checking crypto tax software reviews first hand is a great idea that could help you determine whether or not it is the right software.
pricing and free trials
The best way to test crypto tax software is by gaining hands-on experience with a free trial. many providers on this list offer try-before-you-buy schemes or have basic plans that cost very little.
First-hand experience with a piece of software is the key to finding the right tool to help you manage your cryptocurrency taxes.
Finally, there is also the question of the value you get for the price you pay. it would be better to know how many transactions you do per fiscal year, as these pricing tiers are primarily based on that number.
You should also check if a piece of software will scale well if you make more transactions in the next year.
With some workarounds, different levels also unlock different features. however, not all features are worth the extra price. Remember that getting accurate tax reports on time is what matters here, and don’t be fooled by expensive bonus features unless you really need them.