Tax season in the US is almost over and if you’re a crypto trader/investor, you most likely used some crypto accounting software to calculate your gains/losses. Whether you used TokenTax, Bitcoin.Tax, CoinTracking.Info, or some other service, it likely saved you a ton of time compared to calculating it manually.
However, while software makes your life easier, it cannot perform miracles — if your input data is messy and incorrect, your results will be wrong regardless of how powerful the software is. That’s why it’s super important to utilize software with features that can help you verify the accuracy of your calculations.
If you used Bitcoin.Tax or other software this past tax season, how confident are you that its results were accurate and that you didn’t miss anything? 100% confident? Or way less? For me, I wasn’t confident at all since I utilized 5 wallets, 8 exchanges (3 decentralized), and did lot of peer-to-peer transactions. So when the first calculation results came out, I was not confident at all in the accuracy of my report. Fortunately, TokenTax has a variety of features that helped me double check my raw data and hence increased my confidence in the results. Let’s go through a few different ways you can verify your data.
Checking for missing cost basis
The first thing you can do is utilize TokenTax’s dashboard to sort your trades and see which ones have missing cost-basis.
Some of these may not be an issue if you had airdrops on an exchange for example. But other times, you may be missing some trades in your data, especially if you did crypto transactions outside of conventional exchanges. Fortunately, TokenTax has a wizard that walks you through a handful of possible scenarios for missing data. This was really helpful for me to dive back into my past transactions and see which ones may have been missed or mis-categorized.
After the missing-cost basis issue was fixed, I was able to move on to the next step.
Reconciling end of year balances
Another technique you can use in TokenTax’s platform is their portfolio tool. What it does is gives you an overview of your entire portfolio at the end of the year. You can compare the balances shown in the Portfolio dashboard with your exchange/wallet account balances to see if they match up. If they don’t match up, you are likely missing something and should dive into that particular coin’s trades to get a better idea.
Best in class support team
While I was utilizing TokenTax’s various features to double check my results, I found their support team to be immensely helpful. First and foremost, they have the fastest response time (during business hours) out of any crypto tax site that I’ve come across. This is important because as we get closer to the tax deadline, we don’t have the luxury of waiting several business days to get our questions answered. We need them answered ASAP so we can finish our return!
But even better than that, their team went above and beyond to help me out. When I had some problems with my data, their support team helped me search for duplicates, generate pivot tables to dig into separate coin balances, and even highlighted a handful of transactions for me that I should take a closer look at. Even though it was my fault that my data files were missing some transactions, they were with me every step of the way to fix my problems.
Crypto taxes can be a huge hassle, but tax software like TokenTax makes our lives much easier. However, even with their powerful software, wrong data in -> wrong results out. That’s why TokenTax’s features such as their cost-basis wizard and their portfolio dashboard are incredibly useful to help you double check your data and hence increase your confidence in the results dramatically. If you have any questions, don’t hesitate to contact them at www.tokentax.co and also even if you used another software like Bitcoin.Tax or CoinTracking, I recommend that you also try out TokenTax and use their features and lean on their support team to double check your results.