Taxing agencies consider cryptocurrency as property and therefore taxable.

The USA IRS states on their website, “The sale or other exchange of virtual currencies, or the use of virtual currencies to pay for goods or services, or holding virtual currencies as an investment, generally has tax consequences that could result in tax liability.”

Therefore having software that helps you navigate the tax liability is very important.

But what software is necessary or correct for your circumstance?

This guide shows you all the best crypto tax software on the market in 2022.

We’ve tried them all, and each one appeals to a different kind of person.

This guide will tell you which one is best for your situation to save you time and money this tax year.

Quick Info: Popular Crypto Tax Software

-

The options available can easily become overwhelming. That’s why it’s a good idea to first make a proper assessment of your requirements when it comes to the type of crypto owner you are and the accounting needs you have.

So who needs what?

If you’re a casual trader or deal with cryptos on a hobby-basis, then you’ll be able to get by using some of the free services out there like Accointing or CryptoTrader.

Accointing's tax software is one of the best crypto tax software suites available

If, however, you’re a power-user who deals with thousands of transactions every year, then it’s best to invest in a proper service that synchronizes all your accounts into one dashboard, like CoinTracking or the upgraded tiers of some of the services below.

Finally, if you have your finger in many crypto pies, such as stablecoins, ICOs, and ETFs then it’s best to seek guidance from a certified accountant (CPA) or tax professional who understands each of your asset categories.

-

We’ve reviewed the best bitcoin and blockchain tax software, now we’re going to focus on the next step of the process: getting that data into Turbotax.

Importing Transactions

Crypto tax software integrates with your exchange’s API to fetch and compile a list of all your transactions.

Exchanges such as Binance also allow you to manually export your trade history.

Once you have imported your trade history, the crypto tax software will compile this and give you a rundown of total capital gains or losses.

Contracker.io interface.

You can now export your data. IRS Form 8949 (Sales and Other Dispositions of Capital Assets) is the most common way to do this, and it’s always a good idea to keep a copy for your own records. You can also export directly to TurboTax’s proprietary online format.

Filing With Turbotax

Filing your cryptocurrency capital gains/losses with TurboTax is simple. For this tutorial, we’ll be using the online platform.

To file investment gains and/or losses, you’ll need TurboTax Premier or Self-Employed.

When filling out your financial picture, be sure to select I sold or traded cryptocurrency.

1. Navigate to cryptocurrency

Once you have begun your return and filled out the initial prompts, navigate to the Cryptocurrency tab by choosing Federal > Wages & Income > Cryptocurrency

2. Add cryptocurrency data

Here, you can link the third-party service you used to prepare your trade history, or choose to enter information manually.

3. Import

Upload the .csv file that you prepared earlier.

4. Review

Check the summary of your taxable transactions to ensure that everything looks right.

5. Submit

That’s it! You’ve successfully imported your cryptocurrency transactions into TurboTax and can rest assured that your capital gains and/or losses will be accurately reported.

Make sure to check out these other crypto tax services as well to find the right one for you!

Crypto tax software makes it easy to properly file taxes on your cryptocurrency trading and protects you in the case of an audit.

-

Unfortunately, in most countries, the laws and regulations around crypto are murky at best. This is especially true in the Unites States.

Different parts of the government disagree about what kind of asset virtual currencies like Bitcoin are. The SEC does not consider Bitcoin a security. Instead it is a commodity. The IRS considers Bitcoin property.

SEC Chairman says Bitcoin is not a security...but the IRS still expects you to pay.

That means you are expected to keep track of not only every trade but every transaction. Due to Bitcoin’s usage as money, the IRS has a hard time differentiating between using Bitcoin as a speculative asset to be traded and and using Bitcoin to buy a cup of coffee. This makes trading and using Bitcoin and other coins with different legal definitions very cumbersome come tax season.

On top of that, the IRS has warned many holders of crypto that they are very serious about citizens who skirt the laws or try to use crypto to evade taxes…and they will find out.

The IRS is not fooling around with you. Take audits seriously.

You could spend countless hours tracking all of your trades and purchases and trying to make sense of capital gains. This is amplified by the fact that individual states have their own laws.

That’s why software like the one’s recommended above are so handy. Sure, each of them cost a few bucks, but for the time you save and the protection this software gives you if you are ever audited is worth every satoshi.

-