Digital currencies still haven’t turned into a dominant payment method, but they have been growing steadily over the last few years. It’s a step-by-step process that takes place together with the overall growth of the crypto market. But no matter how rare or modest crypto transactions might be, you need to keep in mind that they are subject to tax laws all over the globe. As a matter of fact, avoiding to pay taxable cryptocurrency gains can result in a maximum sentence of five years in prison or a maximum fine of $250 thousand.
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This can be a big issue for some cryptocurrency traders because most people are having a hard time calculating and filing even traditional tax papers. In such circumstances, it is important to learn all you can about crypto taxes.
In this post, we will show you the basic rules of crypto taxing as well as 10 tools that can help you to calculate your expenses. Let’s take a look!
Taxable and Non-Taxable Crypto Activities
One of the first things you need to learn is to distinguish between taxable and non-taxable crypto activities. This is important because you don’t want to overpay taxes and waste more money than necessary.
Jake Gardner, the best essay writer at UK essay, explains the taxable crypto transactions:
- Selling digital coins for any type of traditional currency.
- Earning digital money through mining or payments from third-party providers.
- Paying for products or services with cryptocurrencies.
- Exchanging one type of crypto money for another.
On the other side, the list of non-taxable crypto transactions includes the following examples:
- Moving your digital money from one electronic wallet to another.
- Moving your digital money from one crypto exchange network to another.
- Donating cryptocurrencies to charities which are not subjects to tax laws.
- Buying digital coins with traditional currencies.
- Giving cryptocurrencies as a gift to another person.
Best Taxable Gains Cryptocurrency Calculators
Now that you have the general notion of how crypto taxes function, it is time to see the best tools to help you calculate your costs. Here are our top 10 picks:
- Coin Tracker
Coin Tracker is one of the most popular solutions in the field of digital tax reporting due to its reliability and flawless reputation. The platform covers it all, including country-specific cryptocurrency and tax regulations. However, Coin Tracker is far from cheap since the basic, Hobbyist plan, costs $49 per year. This package is suitable for traders completing less than 100 transactions annually, while more advanced solutions can handle up to 15 thousand transactions a year.
Koinly is a great tool for crypto traders who want to calculate taxes and find every possible solution to minimize costs along the way. It comes with an intuitive tax calculator, while you also get a portfolio tracker and multiple integrations. You can give it a try for free, but the real fun begins at $79 per year.
- Bear Tax
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Bear Tax is a simple and user-friendly crypto tax calculator with easy functions that you can figure out quickly even as a first-time user. The basic package includes the following features:
- Gain/Loss Summary
- Downloadable tax documents
- Full tax year availability
- Email-based customer support
Keep in mind that more advanced Bear Tax plans cost up to $200 per year, but they do come with a wide range of bonus features.
Bittax is another beginner-friendly crypto tax platform with a full set of basic functions. What we love about this tool is that gives you step-by-step instructions on how to manage your tax files. There are four major phases to go through here:
- Import addresses
- Import exchanges data
- Data verification
- Tax reporting
Another benefit is that you can test Bittax free of charge as all it takes is to sign up for a trial period.
Blox is a powerful crypto taxing solution for all sorts of digital investors. From amateur traders to enterprise-level organizations, everyone can use it to calculate online taxes and file accurate reports. With Blox, you can use a free plan in case you don’t buy or sell more than $50 thousand per tax year. There are also the so-called Business and Enterprise packages with a price of $99 and $299 per month, respectively.
- Crypto Tax
Crypto Tax is a precious reporting tool for users looking for fully credible yet cheap solutions. The app works with over 20 renowned exchanges and more than eight thousand digital coins. You can use it to report in over 30 local currencies, including all of the major ones.
- Bitcoin Taxes
Although you wouldn’t guess it by its name, Bitcoin Taxes is not focusing on the most influential cryptocurrency exclusively. On the contrary, the tool successfully handles dozens of other coins and helps you to calculate taxes for all sorts of transactions.
The features include costs basis, capital gains, short and long-term gains, extensive reporting, and many more. Besides that, Bitcoin Taxes is known for its highly informative library of resources as it gives you the opportunity to learn a lot about cryptocurrency taxation.
- Zen Ledger
- Audit reports
- Cryptocurrency as income analysis
- Tax-loss harvesting
- Unlimited exchange networks
- Crypto mining reports
- Donation-based tax exclusions
Zen Ledger comes in four pricing plans: Starter, Premium, Executive, and Unlimited. The cheapest one starts at $149 a year, while the unlimited package costs $999 annually.
- Crypto Trader
Crypto Trader is a premium cryptocurrency taxing system with reporting options for almost 30 exchange networks. The tool is rather simple since all you need to do is import trades, add crypto income, and download the tax report.
Michael Jacobsen, a cryptocurrency analyst at AssignmentMasters writing service, says you can try Crypto Trader free of charge, but he recommends purchasing one of its pro plans: “For $49 per tax season, you can take care of financial reports quickly and effortlessly.”
- Token Tax
Token Tax is designed with the purpose to “take the complexity out of cryptocurrency taxes.” The platform is simple and it enables users to connect to their crypto exchange networks, monitor trading activities, and file their tax returns. The basic Token Tax plan is worth $65 a year.
Taxable Crypto Issues - Conclusion
Crypto trading is a relatively new business format, but it doesn’t change the fact that investors must report transactions and do their taxes. But being a relatively new topic, crypto taxing causes confusion among traders and so we decided to give you a hand here.
In this post, we discussed the top 10 tools that could help you to calculate your crypto taxes. Have you already tested any of these platforms? Which one do you believe to be the best for you? Let us know in comments as our readers would love to hear about first-hand experiences with crypto taxes!
About the Author:
Sharon is a real expert in studying and resumewriters who provides best writing company in Australian Writings service. She is also a very successful blogger and content marketing specialist who wants to share her knowledge and tips for skills improving.