What to Look for in the Best Crypto Tax Software in the USA?
Updated On January 24, 2023 | by Joseph Williams
Tracking your crypto transactions for tax reporting can be almost as painful as seeing your favorite altcoin tanking wildly. But, whatever the case may be, taxes are inevitable and you have to report every single transaction to the Internal Revenue Services (IRS). When you think about it, keeping all the data handy is a painful experience as well.
Luckily, there are a few crypto tax software in the market that can help you reconcile your crypto gains and losses. This software can automate your crypto taxation process and provide you with ready-to-file paperwork. While all this sounds enticing, there are other features a crypto tax software must-have. No need to sweat as we will share some qualities the best crypto tax software in the USA should possess:
- Integrations and Bandwidth
- Credibility & Legitimacy
- Other Perks
Now, let’s take a closer look at these qualities.
Integrations and Bandwidth
The first thing you need in a crypto tax software is the number of integrations and the following two should be at the top of your list: Application Programming Interface (API) import & Comma Separated Values (CSV) import. API makes the wallet import and data transfer into a tax platform seamless with higher accuracy. All you need to do is copy and paste the API from your wallet/exchange to the crypto tax software. Next up, the platform takes control and downloads all the transactions and reconciles them automatically.
CSV imports, on the other hand, can get a bit time-consuming. You have to download all the transaction history in CSV format and upload it into the crypto tax software. Here comes the inconvenient part because oftentimes you might have to edit the transaction history report to the format that the software supports. Also, compared to the API import, the users will face some bugs in the CSV format. Thus, API integrations are much more seamless and make your life easier.
Bandwidth is also an important factor to consider. This is not the most advertised factor, so you have to get in touch with customer support and confirm its details before purchasing the software. For instance, many crypto software will offer their subscriptions service relatively cheaply. But, once you start to reconcile the transactions, the software might fail to process them and crash because the number of the transactions may be too high. This is an extremely important feature that you must clarify with customer support before buying the software.
Credibility and Legitimacy
Given that crypto tax software is still nascent, it becomes extremely important to check its credibility and legitimacy. At the end of the day, you are going to be responsible for reporting taxes to the IRS, and hence, you should be diligent in choosing software.
One way to check for legitimacy is the team behind the software. Check if they have one or more members from the regulatory/tax compliance space. A team with only developers might not have the tax compliance know-how to navigate in this ever-changing space.
Read to Know How to Make Sure You Don’t Miss Paying Taxes
Get in touch with the customer service and ask if they have taken any initiatives with the IRS or other regulators. Other questions that you can ask them are about the security of the data, their affiliations with the trade and industry organizations, the media presence of the members of the company, and how many taxpayers have the company helped in reporting their tax amounts.
The price is also an important factor because getting a good ROI by paying a small premium against higher bandwidth, integrations, and credibility is worth the cost. Some platforms have pricing tiers depending on the number of transactions you have in a financial year while others charge based on the value of your funds.
When choosing the best crypto tax software in the USA or other countries, keep an eye out for the perks that come with the subscription. Other than capital gains/loss reconciliations, a few software platforms also offer educational webinars, free portfolio tracking, tax planning tools, and more. What’s more? Some crypto tax software allows you to invite your accountant to evaluate your account and double-check the tax reports.
Best Crypto Tax Software in the USA
When it comes to handling your or your clients’ taxes, ZenLedger comes forth as an excellent solution. ZenLedger helps you cover all types of tax reports and forms you might need to file. But, the biggest feather on ZenLedger’s cap is its proprietary feature, Grand Unified Accounting. With this, you can see all your transactions across different exchanges and wallets in a single and easy-to-understand spreadsheet.
ZenLedger has a free plan that covers 25 transactions. If you want more transactions covered, there’s the Starter tier, which costs $49 a year and 100 transactions. The Premium, Executive, and Platinum tiers cost $149, $399, and $999 a year, respectively.
Best Crypto Tax Software – FAQs
1. Is There Any Crypto Tax Calculating Software?
There are several crypto tax calculating software available in the market today but choosing one can be difficult. For the best crypto tax calculation software, you should look for features such as integrations and bandwidth, credibility and legitimacy, prices, and other perks.
2. How Do You Keep Track of Crypto Transactions on Taxes?
Tracking crypto transactions manually can be a laborious experience unless you are a HODLer and make only a few transactions a year. But, for traders using crypto tax software is the ideal way to keep track of crypto transactions on taxes.
3. What Happens If You Don’t Report Cryptocurrency on Taxes?
If you don’t report crypto on your taxes, you will be audited by an IRS audit followed by penalties, or even possible criminal charges. Not paying taxes is considered fraud or tax evasion.