Best 5 Crypto Tax Software
|100 transactions: $49 1,500 transactions: $99 5,000 transactions: $199 Unlimited transactions: $299
|TurboTax, TaxAct, H&R Block, TaxSlayer
|Over 430, including: Coinbase, Binance, Uniswap, Kraken, Robinhood, Crypto.com, OpenSea, Metamask, Trust Wallet
|IRS Form 8949, Income Report, Capital Gains Report, End of Year Positions, Audit Trail Report, Tax Loss Harvesting
|10,000 transactions: free (no tax reports) 100 transactions: $49 1000 transactions: $99 300 transactions: $179 10,000+ transactions: $279
|TurboTax, TaxAct, H&R Block
|Over 690, including Coinbase, Crypto.com, Binance, KuCoin, Bitpanda, and LiveCoin
|IRS Form 8949, international tax reports, audit report
|500 transactions: $65 5,000 transactions: $199 20,000 transactions: $799 30,000 transactions: $3,499
|86 platforms, including Coinbase, Cream, Bitpay, Celsius, Harvest, and Phantom
|IRS Form 8949, international tax reports, Ethereum gas fee report, audit trail transaction report, income report, tax loss harvesting, mining and staking income report.
|25 transactions: free 100 transactions: $59 1,000 transactions: $199
|TurboTax, H&R Block, TaxAct, Wolters Kluwer CCH
|Over 300, including Coinbase, Binance, Kraken, Cash App, Robinhood, Poloniex, and KuCoin
|IRS Form 8489, Schedule D, Schedule 1, and IRS Form 1040
|Unlimited transactions on all tiers $50 for historical tax forms $175 for extensive tax reports $500 for CPA review
|Over 500, including Coinbase, Binance, SoFi, Kraken, Okcoin, BlockFi, and Coinlist
|IRS Form 8489, income reports
CoinLedger is one of the most popular tax software for crypto and digital assets. It’s quite comprehensive and integrates with a lot of exchanges, offers many tax reports, and is compatible with a lot of regular tax software.
The tax forms that are included in CoinLedger’s service are:
- IRS form 8949
- Audit trail report
- Short and long-term gains report
- Tax-loss harvesting report
- Income report
There is no free tier available with CoinLedger. Its first tier, the Hobbyist plan, costs $49 and supports up to 100 transactions. To unlock unlimited transactions, you’ll need to select the $300 Unlimited plan. If you aren’t satisfied with your plan or CoinLedger’s services, they offer a two- week money-back guarantee.
Its plans come with portfolio tracking. This means CoinLedger integrates with wallets, exchanges, and other crypto markets to compile a single dashboard of all your crypto assets.
Pros and Cons of CoinLedger
- User-friendly resources to organize all your information
- 14-day money-back guarantee
- Impressive customer service
- No mobile app
- No free pricing tier
Read our full CoinLedger review.
Koinly is a crypto tax service that can help you automate collecting all the right tax forms for filing. It’s currently available in over twenty countries.
Free tier supports up to 10,000 transactions but has limited features. In the free tier, Koinly will not generate any tax reports for you. It’s essentially intended for you to be able to upload your transactions and explore the Koinly interface.
When you connect Koinly to the crypto wallets, exchanges, and marketplaces you’ve used, it can automatically identify whether a transaction is income from lending or staking. It can also detect futures trading. Koinly also has an error reconciliation feature that detects missing transaction data.
The tax reports available on Koinly are extensive:
- Capital gains and profits report
- Futures and derivatives gains report
- Margin trades report
- Income report
- Valuation report
- Gifts, donations, and losses report
You can export these reports to TurboTax or TaxAct to complete your tax filing.
Pros and Cons of Koinly
- Integrates with over 690 crypto services
- Free tier for testing Koinly
- International support
- No independent tool for tax-loss harvesting
- No mobile app
TokenTax is a full-service crypto accounting firm and a tax service. Part of the benefit of such expertise is that TokenTax specializes in identifying strategies to minimize your tax obligation. The service will file your entire tax return, or if you’d like to DIY it, you can export the reports you’ll need.
If you’re a crypto user who may have filed incorrectly in the past, TokenTax has a back-tax service. They’ll help you correct inaccurate data and tax filing all the way back to 2014.
Though TokenTax only integrates automatically with 86 crypto platforms, they can upload the data from any exchange via CSV.
The pricing tiers for TokenTax run a little more expensive than its competition. Plans start at $65 for 500 transactions and go up to $3,499 for 30,000 transactions. If you have a complex tax situation or the funds to invest in a full-service option, Token Tax is worth considering.
Pros and Cons of TokenTax
- Back-tax filing to 2014
- Extensive educational resources
- Full service tax filing
- Integrates with fewer crypto platforms
- No free version or trial
- No mobile app
Read our full TokenTax review.
CoinTracker specializes in helping you complete all your crypto and NFT tax filing. It also has a portfolio dashboard that displays token prices, historical data, all your transactions, market caps, etc. Users can also take advantage of CoinTracker’s mobile app to view their portfolio and create price alerts even outside of tax season.
CoinTracker has a fee tracking feature that allows users to see the fees they’ve paid per transaction on each uploaded exchange. This can also help inform ways to reduce the tax you owe. CoinTracker will help you prepare all the tax documents you need to file and sync with software like TurboTax, TaxAct, and H&R Block.
If you’re not satisfied with CoinTracker’s service, they offer customers a 30-day money-back guarantee. One potential dissatisfaction is CoinTracker’s lack of support for advanced trading movies like margin trading, swaps, futures, and derivatives.
Pros and Cons of CoinTracker
- 25 transactions free
- 30-day money-back guarantee
- Mobile app
- Limited support for advanced trading
- Doesn’t file your taxes
Read our full CoinTracker review.
TaxBit is a crypto tax software company backed by PayPal Ventures and located in Utah. The service can integrate with over 500 exchanges, wallets, and marketplaces. TaxBit’s biggest draw is that if your crypto platforms are part of the TaxBit network, you can download completed tax forms for free.
Each of TaxBit’s paid plans come with unlimited transactions and are instead set apart by the additional features they offer. The introductory plan is $50 and unlocks historical tax forms. The next $175 tier provides extensive tax reports and a portfolio performance suite. The $500 tier comes with a CPA review and IRS audit support. The paid plans also have a 14-day free trial.
It’s important to note although TaxBit will arrange the forms and documentation you need, it will not actually file your taxes. You’ll need to export the documentation to another tax filing service like TurboTax or take it to an accountant.
Pros and Cons of TaxBit
- 14-day free trial
- Unlimited transactions for every plan
- Free tax forms
- No tax filing option
- Tax optimization requires an advanced plan
Do I Have to Pay Taxes on Crypto Gains?
Yes. You most likely will need to pay taxes on any gains from your crypto. It’s quite similar to the manner in which the IRS taxes any kind of capital gain. The IRS considers crypto property rather than a currency. If you sell crypto for a profit, you will be taxed on the difference between what you purchased it for and what you sold it for.
When filing your taxes, you’ll need to submit IRS Form 8949 and, potentially, IRS Form 1040. The IRS offers an abundance of material on how they tax virtual currency if you’d like to learn more.
Long-Term Gains vs. Short-Term Gains
If you own a crypto asset for less than 365 days, it’d be taxed as short-term gains. For assets you’ve owned longer than a year, you’ll pay long-term capital gains tax rates. The holding period is calculated beginning the day after you purchase the crypto asset.
The two categories have different tax rates, and some traders may choose to sell older coins first in order to pay the long-term gains tax rates, which are generally lower. Long-term gains tax rates tend to be lower to encourage long-term investing.
Realized vs. Unrealized Gains
A realized gain or profit is when your crypto investment is sold for a higher price than when you purchased it. An unrealized gain or profit is when your crypto investment has a theoretical profit that exists even though you have not yet sold it.
Unrealized gains are not taxed. So if you buy crypto and its value in the market increases, that is considered unrealized gains, and it won’t be taxed until if/when you sell. If you sold the crypto, then it is considered realized gains and subject to capital gains tax.
When talking about the crypto gains taxes you’ll owe, that only refers to realized gains.
2022 Crypto Gains Tax Bracket
When determining where you fall in the tax brackets, know that your crypto-realized gains count as income and should be added to any other income. Short-term gains are taxed as ordinary income, and long-term gains have a different tax bracket.
Short-term gains (ordinary income) tax brackets:
|Up to $10,275
|$10,276 to $41,775
|$41,776 to $89,075
|$89,076 to $170,050
|$170,051 to $215,950
|$215,951 to $539,900
|Married, Filing Jointly
|Up to $20,550
|$20,551 to $83,550
|$83,551 to $178,150
|$178,151 to $340,100
|$340,101 to $431,900
|$431,901 to $647,850
|Married, Filing Separately
|Up to $10,275
|$10,276 to $41,775
|$41,776 to $89,075
|$89,076 to $170,050
|$170,051 to $215,950
|$215,951 to $323,925
Long-term capital gains tax brackets:
|Up to $41,675
|$41,675 to $459,750
|Married, Filing Jointly
|Up to $83,350
|$83,350 to $517,200
|Married, Filing Separately
|Up to $41,675
|$41,675 to $258,600
Note that each tax bracket has adjusted slightly from 2021, by about $1,000 or so.
What You Need to File Taxes on Your Crypto
To file your crypto taxes, you’ll need to fill out the IRS form 8949. You’ll need to have all the details about each asset you sold or swapped, including the dates of the transactions, the proceeds, the cost basis, and your total gain or loss.
Not every exchange will provide all these details for tax time. Typically, CEXs do provide the information you need to file taxes. But if you use a DEX, you may need to track your transactions or use a crypto tax software.
Filing Taxes for DeFi
If you participate in the decentralized finance (DeFi) segment of crypto, your tax situation may be more complicated. Tax software programs won’t be able to automate the collection of your transactions and portfolio history from a decentralized exchange (DEX.)You’ll need to manually compile all your transactions and calculate the U.S. dollar amount for those assets at the time of the transaction.
There are resources to help you with the process, and websites that will scan your information to help you locate all the right info. Etherscan, for example, is a block explorer that can keep track of transactions and USD value on the Ethereum blockchain. Other popular network scan tools include: DEXTools, Dexfolio, CryptoTaxCalculator, and DEX Screener.
When Do I Owe Taxes on Crypto?
There are many transactions in the crypto world that will create taxable income. Each type may have slightly different rules when it comes to taxes. In general, though, if you make a profit, you’ll owe taxes.
- Using crypto as payment for goods/services
- Selling crypto for fiat
- Swapping one token for another
- Earning crypto from mining
- Receiving crypto from a fork or airdrop
- Selling or buying NFTs
- Buying crypto with fiat
- Making charitable donations in crypto
- Gifting crypto
- Moving crypto from one wallet to another
- Depositing collateral for a loan
Trading is considered a taxable event. Trading crypto is when you sell digital assets, sell an NFT for crypto, or trade one crypto coin for a different coin type. Selling your investment or exchanging it in any way for a different investment is taxable.
The profit you gain from trading is relative gains, and you will owe taxes on it. This applies regardless of what currency you’re exchanging your assets for. If you’ve traded Bitcoin for Ether, a token for an NFT, or a digital token for fiat—all instances are considered taxable events.
Let’s say you buy 1 BTC for $50,000, its market value increases to $75,000, and you sell it. That’s $25,000 in capital gains that will need to be reported on your taxes.
NFTs, or non-fungible tokens, are digital assets that can be sold and traded on the blockchain. An NFT can be a piece of art, a trading card, music, event tickets, metaverse property, etc. When you own an NFT, you own all rights, royalties, and trademarks.
There are several taxable events that involve NFTs. When minting an NFT (the initial creation of an NFT to the blockchain), that process sets the cost basis for an NFT. Selling, trading, and buying NFTs are considered taxable. And if you earn royalties from an NFT, that income is taxable.
For example, if you buy an NFT for $500 and trade for another NFT worth $700, you’ve earned a $200 (taxable) capital gain. If you create an NFT, the profit from selling it would be considered ordinary income.
Airdrops & Forks
Airdrops (also called token giveaways) are when crypto tokens or coins are given away for free. This usually happens when a new coin is launched or a new project needs to draw in users. It’s often a promotional tool and sometimes only given to existing token holders.
A fork is when the code behind a blockchain is altered enough to split the blockchain and create a new coin. Some prominent examples of this are Bitcoin and Bitcoin Cash or Bitcoin Gold. Often when a new fork occurs, holders of the existing coin will be airdropped an equivalent amount of the new forked coin. Both forks and airdrops are typically treated as income for tax purposes.
In September of 2022, a fork on the Ethereum blockchain resulted in ETH holders receiving an airdrop of an equivalent amount in the new token, ETHW. Basically, anyone who held ETH on the Ethereum chain would own the same amount of ETHW on the new ETHPoW chain.
Crypto lending is when users deposit their currency to be lent out in exchange for regular interest returns. The interest you earn is considered income and is thus taxable. If you take out a crypto loan, it is considered non-taxable. If you use your crypto loan for investment or business reasons, you can write off your loan interest fees.
If you decide to lend ETH for example, and earn $50 in interest during the tax year, you would report that as $50 of income.
Staking is when users who own crypto dedicate their assets to the proof of stake consensus. It’s collateral for the blockchain to verify and validate transactions. When you stake your assets, you are considered a transaction validator and will earn rewards.
Those rewards are similar to interest and will be taxed as income. The US dollar value of those crypto rewards is based on the market value of the coin the day you received the reward. If you stake $50,000 of your BTC funds and the return for your rewards is 5% per year, you’d earn $2,500. That $2,500 would be reported as income on your taxes.
If you are paid in cryptocurrency, you will need to file and pay income taxes. But if you received crypto payments for your business, it can be taxed as business income instead. This also opens you up to business-related deductions.
The income tax will be based on the value of the crypto when you receive it. That initial value (the cost basis) is also used to measure any gains or losses when you convert the currency to fiat.
This one is pretty straight forward. If someone pays you $100 worth of BTC, you would report $100 in income, even if the value of that BTC has increased to $200 when you file.
Crypto Mining Rewards
Crypto mining is when you validate transactions on a blockchain network. New coins are generated to reward the miners. It takes quite a bit of computer power to successfully validate crypto transactions to the blockchain. If you participate in mining, you may be subject to an income tax from the mined currency and a capital gains tax when selling or trading that mined currency.
You may report your mining earnings differently depending on whether you are a hobbyist or a business miner. If you mine crypto fairly casually in your free time, your activity likely falls in the hobbyist category. This means the income you earn from mining will be reported as other income on Form 1040. You can also deduct related expenses as itemized deductions on a Schedule A.
If you mine crypto as a full-time business, your income and expenses will be reported on your Schedule C form. You will also have to pay self-employment tax on your mining income. Any deductions related to mining can be added as business deductions.
If you mine 3 BTC when Bitcoin is worth $30,000 each, you’ve earned $90,000. You’d then report that $90,000 as income on your taxes.
Perpetual contracts allow someone to buy or sell a crypto asset at a predetermined date for a set cost. With perpetuals, there is no expiration date, and they can be held for an indefinite amount of time. You can also sell or trade perpetual contracts.
Taxation for perpetuals has a special rule called the 60/40 rule. 60% of perpetual contract capital assets are taxed as long-term gains, while 40% are taxed as short-term gains.
Let’s say you order a perpetual contract of 1 BTC at $50,000 and one day the market price of BTC is $57,000. You can then choose to sell the contract and profit $7,000. 60% of the profit you gain from the sale will be taxed as long-term and 40% as short-term gains.
How to Minimize Crypto Taxes
Like with any tax system, there are opportunities to apply deductions and reduce the amount you owe for crypto taxes. There are also a few strategies for the way you invest your crypto that can lower the amount you owe.
Tax Loss Harvesting
When you sell crypto, you either make a profit (gain), or you lose money (if it’s worth less than when you bought it.) When it comes to taxes, selling at a loss can offset the taxes you owe for gains. You can also buy back the asset for gains later on.
When you sell assets at a loss, you can deduct the net capital losses from your net capital gains. Tax loss harvesting will reduce your overall capital gains, which then lowers the tax rate you’ll pay. For example, if your total capital gains were $30,000, but your total capital loss was $10,000, your total taxable capital gains would then be $20,000.
Similarly, some choose to utilize a wash sale strategy to offset their capital gains. A wash sale is when you choose to sell an asset as a loss and then repurchase it. This allows you to still own the assets but benefit from a capital loss deduction by selling them. The IRS bans taxpayers from deducting losses from wash sales for traditional investments, but no such rule exists yet for cryptocurrency.
Like with traditional taxes, you can deduct donations from your crypto taxes. If you donate crypto to a nonprofit organization, you’ll receive a deduction for the value of the crypto when you donate it. You also don’t have to pay the capital gains tax you’d have owed on the crypto if you sold it before donating.
For example, let’s say you purchased BTC for $10,000, and it’s now valued at $30,000. You could sell it for a $20,000 capital gain (you’d owe taxes on that gain) and then donate it for a $30,000 write-off. Or you can just donate it directly and leave with a $30,000 write-off.
Deduct Transaction Fees
Most crypto fees are tax deductible—trading fees, conversion fees, withdrawal fees, borrowing fees, and deposit fees.
The crypto fees you pay on transactions will be deducted from the taxes you owe by being added to the cost basis. If, for example, you buy an asset for $1,000 and pay $20 in fees, your cost basis would then be $1,020. When you later sell the asset for $2,000, your taxable capital gain would be $980. The fees you paid count towards the initial purchase price, which lowers your taxable profit by $20.
You aren’t taxed for crypto assets that you simply own. Once you sell them, you’ll be taxed for the profit. Holding an asset for less than 365 days makes the profit a short-term gain. Over 365 days, your asset is then considered a long-term gain.
Long-term gains are taxed at lower rates (between 0%-20%) than short-term gains (10%-37%.) Holding your crypto taxes for longer than a year can reduce the amount you’ll owe in taxes. In general, it’s better to consider long-term investments over short-term trading. Looking at the history of the value of your assets will matter, too, when deciding which assets to hold or sell.
Specifically, there are two different methodologies for holding and selling your assets that can affect your taxes. If you choose to sell the oldest assets first, it would be considered First-In-First-Out (FIFO.) Or you could choose to sell the most recently acquired assets, a method called Last-In-First-Out (LIFO.)
If you compare the cost basis for when you purchased each asset, you can decide to sell either FIFO or LIFO for a lower capital gain (whichever has the lower cost basis.) A lower capital gain will mean a lower tax obligation.
Use Crypto IRAs
A crypto IRA allows users to invest cryptocurrency into a retirement savings account. IRA deposits are not taxed, and neither are the gains from an IRA account. Your contributions are also tax deductible.
You are taxed when you withdraw the funds for retirement. You can open a crypto IRA with companies like iTrustCapital, BitcoinIRA, and Alto CryptoIRA.
Should You Hire a Crypto CPA?
A crypto CPA is a certified public accountant who specializes in cryptocurrency. It can be tricky to understand how taxes work for your crypto portfolio, and a CPA can help ensure you file correctly. If figuring out your taxes for a year of crypto trading, mining, and lending seems intimidating, it may be best to leave it to the experts.
Many CPAs are unfamiliar with the complexity of crypto taxes. If you choose to hire one, you’ll want to ensure they specialize in digital currency. When reaching out to potential accountants, Inquire about their experience with crypto and ask specific questions about the crypto tax laws. If they own crypto themselves, that’s a good sign they are invested in understanding crypto taxes.
If you run a business related to crypto or earn your primary income in digital assets, make sure your CPA is well-versed in business-related tax procedures and advanced trading outcomes.Some of the tax software services we recommended can connect you to an experienced CPA. CoinLedger, for example, has a database of crypto tax accountants for anyone to utilize. You’ll find a similar resource from Koinly.
You can also search online or on social media for crypto accountants in your area. If you’re a part of a crypto community on Twitter or Discord, that can be a good place to find a recommendation.
Final Thoughts on Crypto Taxes
Most of your crypto activity will be subject to either income taxes or capital gains taxes. There are a number of ways to reduce what you owe and invest in low-cost strategies. Even if you don’t owe taxes on some of your crypto actions, you will still need to report it.
Tax software can help automate this process and even support you in the event of an IRS audit. It’s best to remain familiar with your crypto portfolio and the tax rules that may apply. Then you can make strategic tax-reducing decisions throughout the year.
Frequently Asked Questions
Do I Need to Report Crypto to The IRS?
Do I Pay Taxes on Crypto if I Lost Money?
How Much Does The IRS Tax on Crypto?
How Much Do I Have to Make in Crypto to Report to The IRS?