With tax day coming close, more and more investors and traders are wrapping up their taxes. Given the enormous rise in awareness of cryptocurrency last year, good amount of people are looking to file their income & gains on cryptocurrency trading too.
IRS recognizes any income generated by trading cryptocurrency or accepting cryptocurrency for goods and services as taxable. So, it’s mandatory to file your gains along with your tax returns before the midnight of April 17th. As we have seen IRS trying to fetch information of cryptocurrency traders from various sources, they doesn’t seem to go easy on people who doesn’t report their income or gains on crypto.
So to be safe than sorry, most of the traders are filing their gains on cryptocurrency based on the instructions and guidelines given some time back. I am no different and I’ve filed my gains recently and here’s my experience.
There are a couple of tools available in the market to calculate your taxes on crypto trades by integrating your exchanges securely and download a gain/loss summary and provide you with 8949 capital gains document.
Calculate Bitcoin Taxes for Capital Gains and Income_Calculate Bitcoin taxes of capital gains and income for Bitcoin, Ethererum, and other alt-coins from trading, spending…_bitcoin.tax
CoinTracking · Bitcoin & Digital Currency Portfolio/Tax Reporting_Full Report for all your Bitcoin and Altcoin trades. Including Profit / Loss calculations, Price Charts, Unrealized…_cointracking.info
BearTax — Your Crypto Tax Assistant_Simple & trusted platform for crypto traders, accounting professionals, CPAs to connect exchanges, import transactions…_bear.tax
After trying the above 3, BearTax stood out strong for few reasons [PS: I know founders of BearTax closely and I’m an early user].
- Cointracking has left me with negative balances and an error saying sells are more than buys as it couldn’t match or prompt me for review.
- Bitcointax was very expensive for me and no support on questions I had.
- BearTax on the other hand was able to match my withdrawals and deposits across the exchanges intelligently and showed my gain/loss summary without paying a single penny. I had to pay only a small amount to download my capital gains form and detailed CSV for audit purposes.
Now I’ve got my tax forms and were filed by my tax preparer without any issues. Woohoo! BearTax FTW!!
I find this meme very funny so including it here.
Follow me for more informational content in blockchain, cryptocurrency and auditing space. Thanks for reading.