What is crypto tax software?
Crypto tax software will help you understand the gains you make within your portfolio and advise on how much you should expect - and plan - to pay in tax.
They take the complication out of understanding and planning for the tax season which should help you avoid any nasty surprises in the form of big bills from your countries tax collection agency.
At the very least, they should help you manage your portfolio with the tax man's cut in mind.
Does crypto tax software cover taxes for NFTs?
The best crypto tax solutions should also cover NFT taxes.
Because a lot of the gains you make when selling NFTs for a profit will be made in cryptocurrency.
it doesn't matter which NFT marketplace you use, 995 of them operate with crypto.
As such, the "financial" side of flipping NFTs or investing in them is in cryptocurrency.
By that logic, a good crypto tax platform should cover your gains and portfolio of NFTs.
Are these simple crypto tax calculators?
Some of them are, yes.
However, a lot of the best crypto tax solutions are so much more than a simple crypto tax calculator.
A good solution will help you understand your tax obligations and portfolio in more detail than reading out a simple number.
They should work in concert with your plans to help you not only plan for the tax season, but identify why you have to pay that amount and potentially help advise on what you can do to optimize your portfolio for optimal tax returns.
Are these crypto tax solutions free?
Some are, but the best tax solutions - be they for crypto or not - will come with a price.
While we are not financial advisors and encourage everyone to do their own due diligence, we believe there's a huge benefit to having the right software and solutions to help you calculate your tax obligations.
Not only will these services save you a lot of time, they'll help you rest easier knowing you've planned for big tax bills.
They also often help you create simple paperwork that makes filing taxes so much easier. We're talking things liek. profit and loss sheets as well as helping attribute income and outgoings from one central location.
The time these things can save are worth the money alone.
but they might not be all you need.
Is crypto tax software a replacement for an accountant?
If you're a small trader who's just dipping their toes, then you might be fine to use software and nothing else.
But really, the best and most complete solution - especially for those who are trading vast amounts -is to also have an accountant to double check and organise everything.
Yes, this will come with an additional cost.
However, from personal experience I can say that the fee your accountant charges you will save you a lot more in the long run. Their knowledge of the industry and the best way to optimize your reports will save money each and every year.
The only problem you might have is that crypto tax is still relatively new. A lot of the traditional accountants out there haven't yet managed to add crypto tax to their skill set.
Make sure you do your research and choose someone who knows the industry and your obligations.
What's the best crypto tax software for my country?
This really depends on where you are.
Unlike marketplaces and exchanges, there really isn't any one crypto tax platforms or software that's the perfect solution for each and every country.
Most will do thew basics of what you need (tracking gains and offering detailed reports for your return). however, you might need an accountant to look things over to make sure they fit with your country's requirements.
There are a few that are built specifically for certain countries.
And as crypto is regulated differently in each location, you should try and find one built specifically for your territory.
However, if that's not possible, check out the tool and see if they offer the bare essential functions for reporting crypto gains for tax in your location. Then bolster that with an accountant.
How to choose the best crypto tax solution
There's no one solution to rule them all when it comes to crypto tax. However, there are a few key pointers you'll want to consider when looking at choosing one for your needs.
- Integrations and support - does the crypto tax software integrate with the platforms you use to trade? Does ti support the currencies and assets you trade? If it doesn't, it's going to be very difficult to properly asses your crypto tax obligations.
- Customer support - do they have good customer support should you need help.
- Accountant log ins - Can your accountant log in and pull reports and make changes without your assistance? This will massively reduce the time it takes for them to do a good job.
- Location experience - Does the crypto tax software work specifically with brands and people within your location? If not, you might have to jump through more hoops to make your tax return correct for your country.