Crypto and Taxes — The Basics Part 3
This is Part 3 of 3 on how to file your cryptocurrency taxes.
Part 1 went over the basics of creating a capital gains/loss report. We will touch on things like cost basis, 1099B, etc.
Part 2 went over into “How do I know if I need to pay taxes?” We will go over use cases such as buying altcoins, mining, donating, etc.
Part 3 will go into some of the tools out there to help you calculate the reports.
Disclaimer: This isn’t tax advice, nor does it replace hiring a CPA. This information is based on personal experience, filing my own taxes, and talking with friends/CPAs on how they filed theirs.
By now you must be an expert on cryptocurrency taxes (and probably stock taxes as well). Most people don’t normally file Schedule D, so now you are joining the elite of the elite :).
If you bought stocks, it is easy. You get a 1099-B from the insitution, plug it in/hand it to your CPA/import into tax software, and you are done.
Unfortunately, cryptocurrency is in its infancy and those requirements/tools aren’t provided/available from the exchanges/institutions.
Thankfully there are a few 3rd party tools and a few services that can help.
www.cointracking.info
The most robust cryptocurrency portfolio/tax tool for calculating your tax and capital gains. I recommend using this if you are an advanced user, have lots of trades, or want extremely detailed insights into your portfolio.
Pros:
Handles almost every taxable event we described in part 2.
Provides tons of forms and reports for tax purposes.
Cons:
Looks like it was made from the 90s
Expensive if you have more than 200 trades
Free version only supports importing via csv or manually entering information
Below are some screenshots:
Cointracking.io is a portfolio tracking tool for cryptocurrency exchanges and just started released a tax section to help you. I recommend using this if you have a few of exchanges, don’t want to manually add trades, and if you are okay with syncing your exchanges.
Pros:
Simple and intuitive
Supports syncing popular exchanges
Provides multiple tax reports
Provides a free csv of all your transactions
Cons:
Not an exhaustive list of exchanges
You have to do a little manual work to list some transactions as trades vs transfers
You may need to upload a csv for some situations
At the time, doesn’t support adding a memo to a transaction.
Below are a few screenshots:
www.cryptotrader.tax
Cryptotrader is in beta, but I wanted to give a shout out to them because they are also a cheap alternative to syncing all your exchange information for tax purposes. They have a few tiers you can check out. I would recommend them (after they are out of beta) if you only have a few exchanges and only a few trades.
Pros:
Simple process of selecting exchange, importing (via csv), generate report
Easily generate reports.
Clean interface
Cons:
Need to pay if you have more than 25 trades.
Need to pay if you want to auto sync exchanges.
Need to pay for multiple calculation methods
Below are some screenshots:
Coinbase tax tools
I want to give an honorable mention to Coinbase tax tools. If you only have Coinbase, they provide free tax tools to help you calculate your cost basis. I only recommend them if you bought and sold using Coinbase.
