Filing your taxes each year can be a long, grueling process. Add cryptocurrencies into the mix and it only further complicates the process. Rather than struggling through the process and risking inaccurate filings, there are better, more accurate ways to file your taxes accurately. From providing proper documentation to choosing the best cost basis method for you, there is no shortage of steps in calculating your cryptocurrency taxes. With so many steps in the process, we recommend leveraging cryptocurrency tax software to speed things up and take the element of human error out of the process.

Issues Most Cryptocurrency Users Face

Before we delve into different software options, let’s explore some frustrating hurdles. There are many issues cryptocurrency users face when filing their crypto taxes, some of the more prevalent issues include lack of supporting documentation, using the optimal cost basis method, and determining the taxability of certain transactions.

Each of the issues above, when left unresolved, can leave the cryptocurrency user with a less than optimal tax liability calculation. For example, without a centralized repository of your transactions, you’re unable to select the specific identification cost basis method. 

Additionally, not all income transactions are the same and treating them as such will lead to an incorrect tax calculation. For example, Bitcoin earned as a credit card reward is not taxable until sold. Understanding these nuances is key to an accurate filing. 

How Cryptocurrency Tax Software helps alleviate these issues

Cryptocurrency taxes software alleviates the pain of manually compiling your cryptocurrency transactions. Most software includes APIs that allow data to flow in automatically from exchanges and wallet addresses.

Once all of your transactions have been imported, it’s time to calculate your tax liability. Most cryptocurrency taxes software has scenario analysis capabilities built in that will allow you to run your tax calculation using a variety of cost basis methods allowing you to select the most advantageous one.

Lastly, cryptocurrency taxes software enables the ability for transaction tagging. Instead of treating all income the same, you are able to properly identify and tag transactions which allow the software to assign the correct tax rate to the transaction when running scenario analysis.

Our Recommendation

With years of experience, our team has tried many of the cryptocurrency taxes software on the market. One stands out from the rest, CoinTracking.info.

CoinTracking.Info is your one-stop shop for your cryptocurrency taxes needs. It hosts a full suite of APIs to easily import and maintain your cryptocurrency transaction data from popular exchanges such as Coinbase and wallets such as MetaMask. Once your transactions are in you’ll have the option to run tax liability calculations with a wide variety of cost basis methods, allowing you to choose the most optimal method. Lastly, you can rest assured your tax calculation is correct with CoinTracking.Info’s tagging and data malleability features.

Guidance From Our Experts

For even more peace of mind next tax season, you can rely on a crypto tax CPA who uses informative software to help with your taxes. If you have additional questions about choosing the Crypto CPA, don’t hesitate to reach out to our team at Founder’s CPA for guidance!

Curt Mastio
Post by Curt Mastio
Nov 27, 2023 9:25:14 AM
Curt Mastio started Founder’s CPA in 2017 and currently serves as the Managing Partner of the firm. After obtaining both his Bachelor’s and Master’s degrees in accounting from the University of Illinois in Urbana-Champaign Curt started his career in Big Four public accounting. Shortly thereafter Curt served as the Chief Financial Officer of Storage Squad began his stint as an Adjunct Instructor at Northwestern University’s Farley Center for Entrepreneurship and has been teaching Accounting & Finance to undergraduate students for 6+ years. In his current role Curt oversees strategy, operations, and business development at Founder’s CPA. Further, Curt has experience working directly with 200+ startups and small businesses providing accounting, tax, and outsourced CFO services. His industry expertise lies in the SaaS, Blockchain, Marketplace, and Fintech industries. He has served as a key advisor working directly with startups that range from pre-revenue to companies generating over $30 million dollars a year in revenue. Lastly, he serves a key role working directly with the firm’s clients that have collectively raised over $200 million in venture capital funding to date. Curt is also an active advisor, mentor, and investor in the startup ecosystem. He has facilitated numerous workshops, webinars, and presentations to incubators and other startup-centric organizations. He is also an active mentor for Techstars in both Chicago and Iowa. Outside of his daily professional duties Curt is actively involved with Beat the Streets Chicago and was a founding member of its Young Professionals Board. His efforts in both leadership and community involvement were recognized when he was awarded the Illinois CPA Society’s Outstanding Young Professional Leadership Award in 2020. He was also a panelist at their annual conference in 2022 where he spoke about his experiences starting and operating a public accounting firm. He maintains an active Certified Public Accountant designation that he obtained in 2014. Outside of work, Curt can be found spending time with his friends & family including his dog Rufus. His hobbies include golf, boating, cooking, reading, and attending sporting events & concerts.