Crypto and Bitcoin Income Tax Software: Which is Best?

If you thought you could get into virtual currency and avoid income taxes, the IRS and other taxing agencies are a few steps ahead of you. All taxing agencies consider cryptocurrency as an asset or a commodity even though there's nothing tangible you can put your hands on. Either way, they've determined that cryptocurrency is taxable, so you'll need an accountant or DIY tax software.

However, the intricacies of tax software can be as confusing as the IRS tax code, so how do you decide which crypto software is best for your needs? The following information on the best cryptocurrency software programs may help you decide.

Types of Tax Software

The following are three of the most popular programs for reporting your crypto transactions:

• Accointing: Its major features are the ability to print your tax reports throughout the year, it connects 4500 coins from all wallets and exchanges, and supports transactions from the following countries: Austria, Germany, Switzerland, USA, and the UK. Trades are exported in the proper format for the appropriate governmental entity, and your crypto portfolio keeps a record of all your transactions throughout the year. This enables you to print a date-sensitive report at any time during the year. The price ranges from free to $299 annually, depending on the number of crypto transactions you had.

• CryptoTrader.Tax: This one readily interfaces with TurboTax and most crypto exchanges and facilitates integrating your crypto taxes into your regular taxes. The price ranges from $49 to $299 annually, depending on the number of crypto transactions you had.

• Koinly: Exports forms to Canada and the US, its clean interface facilitates use, and it supports more than 300 exchanges. Koinly's price ranges from free to $400 per year and is based on the features you need and the number of transactions you had during the year.

Although there are other programs, these are among the most popular. How do you know which one you need? That depends on your use.

Casual or Hobby: If it's casual use or a hobby, then the free form of some of these may work satisfactorily.

Power User: If you have multiple crypto transactions each day, they can add up to thousands of transactions annually, so you'll need a more sophisticated program that has a consolidated dashboard.

Professional User: If you have many types of crypto and you have many transactions annually, you should probably enlist the advice or services of a professional tax accountant who specializes in crypto transactions. The field of cryptocurrency is still relatively new, and the rules and regulations change frequently. In addition, some government agencies classify crypto differently than others, which can affect the amount of tax you owe.

If You Decide to do Your Own Taxes

If you decide to do your own taxes and need current prices on your crypto, the information is readily available online. However, using a professional tax preparer can save you money, and you'll have a backup in case you're audited and have to appear before the IRS. As with traditional taxes, there are methods for saving money on the crypto taxes you owe. A professional tax accountant is the best source of advice for that. Be sure not to wait until the last minute, though, or you may lose out.