Cryptocurrency is a digitized form of currency that uses cryptography to aid in the exchange of financial transactions and assets, as well as create more units of cryptocurrency. It is designed to be untraceable and works outside centralized banking organizations.
Cryptocurrency was introduced a little over a decade ago and most governments were against the idea of this form of currency, due to its untraceable nature.
In 2017 there was a colossal boom in the value of bitcoin and traders all across the globe made enormous amounts of money. This lead to the creation of new forms of cryptocurrencies and grabbed the eyes and ears of governments all over the world. A few of them even chose to implement cryptocurrency in their markets.
Since cryptocurrency was still a relatively new concept, there were no standardized tax regulations laid out. Now since governments were involved, they pushed towards and finally created different forms of cryptocurrency tax regulations. Now, cryptocurrency is viewed as abstract properties, hence taxes are applied to them.
Although the issue of it’s untraceability concerns tax departments, wherein they will not know who hasn’t paid their taxes. Many people are voluntarily stepping up and applying for taxes anyway to avoid consequences in the future, possibly even jail time.
This gave birth to the bitcoin tax calculator, which is a tool to manage your investment portfolio, transactions, and calculate your taxes.
Bitcoin Tax Calculator Tools
BitcoinTaxes is one of the oldest and most popular among the bitcoin tax calculator tools. It is an online tool which allows traders to manage and generate their taxes by inputting the details of cryptocurrencies they have bought or sold. It can also track other expenditures and donations made, as well as income and mined currencies earned by the user.
Once all the necessary inputs have been provided, the BitcoinTaxes tool will calculate your tax.
BitcoinTaxes generates the following reports.
- Capital Gains Report- This report provides the cost basis of all your transactions, sales proceeds and sales gains.
- Income Report- This provides the information on the currency you have earned through cryptocurrency mining.
- Donation Report- This lists out the donations and tips made by you.
- Closing Report- This will show you the net profit and loss, as well as cost basis. This is done before the fiscal year, so you can track your progress and assess strategies for the next year.
CoinTracking is condersided by most cryptocurrency traders as the best bitcoin tax calculator.
This is due to the user-friendly nature of the tool. CoinTracking will give you an exact figure of your taxes even if your portfolio is large and contains a diverse range of investments.
This is also an online tool which enables users to connect their trading accounts by using APIs or CSVs. CoinTracking will then scan through your entire trading history, total gain, total losses, and determine the profit or loss of your account or accounts for the year.
You can then export your report in commonly used formats such as; Excel, XML, CSV, PDF and JSON formats.
The convenience of this bitcoin tax calculator is that it will scan your entire history and show you the details of every trade transaction. You can also retrieve airdropped coins which is great because let’s face it, not everyone accounts for them..
CoinTracking supports all forms of digital currencies and 25 major cryptocurrency exchanges, making this the best bitcoin tax calculator tool for those traders trading over multiple exchanges.
Both CoinTracking and BitcoinTaxes are free for users online, however it is not the full version of the software. Hence, there is only a small set of features available for the user. Subscribing to the premium version of these bitcoin tax calculator tools allows you to access all its features. This includes a Capital Gains Report done with the calculation(FIFO, HIFO, LIFO, LOFO) of your choice and is prepped for submission to your tax officers or accountants.
CoinTracking is more suited toward the big time crypto traders as it can handle a lot of altcoins. Although the price for this bitcoin tax calculator tool is higher than other services, it is worth it for the big investors.
LibraTax is a popular bitcoin tax calculator for traders residing in the United States.
Similar to the other bitcoin tax calculators, LibraTax tracks your trading activities, generates reports on taxable transactions, and determines a personalised cost basis for your capital gains and losses. This tool also organizes your wallets from different exchange platforms such as, Coinbase, BitGo, BitStamp, GDAX, and collates them in a spreadsheet format.
LibraTax supports a wide variety of currencies such as; Ethereum, Litecoin, Bitcoin, Monero, Zcash and Ripple. It also generates reports on disposals, acquisitions, balances and tax lots.
There is a free online version which supports upto 500 transactions, while the premium version can handle up to 5,000, along with additional features for report generation. Apart from these services, it also logs all your data, allowing you to trace back and process tax returns for the previous years if you have missed out on doing so.
Coinbase tax calculator
This tool generates a single report which compiles all your purchases, sales, and transactions on your Coinbase account. This will generate a cost basis allowing you to calculate tax based on your gains and losses. Reversed payments will be omitted from the report avoiding you the hassle of going to all those extra entries.
The ZenLedger crypto tax calculator is probably the best of the lot, because it provides every feature available in premium bitcoin tax calculator tools, along with money saving tips for free. ZenLedger also provides excellent customer support, so you’ll have no problem navigating through the tool if you ever hit a speed bump.
So what are you waiting for? Sign up for an account today and get your estimation done, for free.