Cryptocurrency adoption continues rising, with more investors trading and transacting using crypto. However, crypto taxes remain complex to file properly. Without the right software,calculating capital gains and losses across exchanges can be extremely confusing.
Using one of the top crypto tax tools can simplify tax filing by automatically importing transactions, computing gains and income, and generating required tax forms. This eliminates manual work and errors that could lead to future audits.
This guide will compare the top 5 highest rated crypto tax software options for efficiently preparing your cryptocurrency taxes.
Why Do I Need Crypto Tax Software?
Cryptocurrency transactions are taxable events according to the IRS. This includes:
- Trading crypto to fiat currency
- Trading one crypto for another
- Earning crypto income and mining rewards
- Spending crypto on goods and services
Whenever you dispose of crypto, it is either a taxable capital gain or a deductible capital loss.
If you only HODL crypto and have not sold, you typically don’t need to file anything. But if you have traded or spent crypto in 2023, you must report this.
Manually tracking every taxable event across different wallets and exchanges is extremely difficult. Unlike stocks held in a brokerage account, your crypto transactions are not comprehensively tracked on any one platform.
Just a few reasons why using crypto tax software can simplify filing your taxes properly:
- Automatically imports all your crypto transactions – Connect to exchanges, DeFi platforms, NFT marketplaces, offline wallets and import all transaction history without manual work.
- Accurately calculates capital gains and losses – The software handles all the complex capital gains tax calculations across platforms.
- Provides necessary tax forms and reports – Software can generate Form 8949, Schedule D, FBAR and other forms required for filing.
- Avoids audit risk – Taking advantage of tax-loss harvesting, applying the right cost basis method, and having highly accurate reports reduces audit chances.
Manually preparing crypto taxes means you must securely track purchase dates and prices, sale dates and prices, transaction fees, and categorize each taxable event correctly yourself. Then determine if it was a short or long term gain/loss, calculate gain amount, and compile the proper reports across potentially dozens of exchanges and wallets.
As you can see, cryptocurrency taxes can quickly become extremely confusing without leveraging software to simplify the process.
“I’ve been trading crypto for years across 5 different exchanges, earning yield through DeFi, and spending crypto daily. Keeping track of cost basis, capital gains, and tax loss harvesting was becoming a nightmare until I started using CoinTracking.”
– Alisa T., Crypto Investor & Trader
Now let’s overview what features you need to evaluate when choosing the right crypto tax software for your needs.
Key Features to Look For
With hundreds of crypto exchanges, wallet apps, DeFi protocols, play-to-earn games, metaverses and NFT platforms emerging, the scope for crypto tax reporting keeps expanding.
Here are the most important features to evaluate when researching crypto tax solutions:
- Which major exchanges are supported? New platforms?
- Is API or CSV import available?
- Can it connect to wallets, DeFi, NFTs, Play to Earn games, Metaverse worlds?
Having robust connections to automatically pull all transaction history from wherever you hold or interact with crypto is essential.
- How are short vs. long term capital gains calculated?
- Which accounting methods offered for cost basis?
- Does it support crypto donations, lost or gifted coins, hard forks, staking, mining etc?
The software methodology matters significantly. Using FIFO, LIFO, average cost basis, and managing sales across multiple exchanges can produce very different tax results.
Reporting & Tax Forms
- Does it provide required IRS forms – 8949, Schedule D etc?
- Can reports be customized with additional data?
- Does it offer planning for future years?
Automatically generating properly formatted tax forms like the complex Form 8949 and Schedule D is a major benefit.
Support & Audit Protection
- What type of tax expert support is offered?
- Do they provide audit support or guarantees?
Software with tax professionals on staff who can review your returns and stand behind their accuracy is key.
Ease of Use
- How intuitive is the interface? Short learning curve?
- Is crypto handling automatic or still manual work?
- What users say about the platform.
Even with tax software, crypto taxes can still be confusing for average investors. Choose a platform with effortless onboarding, data imports, transparent fee structure and responsive support.
Now let’s compare the top 5 highest rated tax solutions.
The 5 Best Crypto Tax Tools
- CoinTracking – Best Overall
CoinTracking is the best overall crypto tax software based on user reviews and ratings across most evaluation criteria.
Some key features include:
- Over 10,000 Supported Integrations – CoinTracking connects with virtually every major exchange, in addition to wallets, DeFi platforms, NFT marketplaces and crypto games/metaverses. API imports available.
- FIFO, LIFO, HIFO & Average Cost Reporting – Pick the optimal accounting method for your needs across exchanges.
- Complete Tax Reports – Automatically generates all required forms – 8949, Schedule D, FBAR, full tax reports and more. Additional customization available.
- Audit Support Guarantee – If you get audited, CoinTracking will appoint a tax pro to help defend your returns. Provides audit guarantee based on accuracy of reports.
Importing transactions and getting clean tax reports is generally smooth and automated for most users. One downside is CoinTracking is pricier than competitors, with plans starting at $180 per year. However for active crypto traders dealing with hundreds or thousands of taxable events, the convenience tends to make the cost justifiable.
“I was wary of the price at first, but after using the platform and seeing the significant time it’s saved me in preparing my crypto taxes, CoinTracking is well worth the money.”
- ZenLedger – Best For Tax Loss Harvesting
ZenLedger is another top rated crypto tax software specifically tailored to investors who trade actively across multiple exchanges and protocols.
- Tax-Loss Harvester Tool – ZenLedger provides a dedicated tool to efficiently harvest crypto tax losses to offset capital gains and lower your tax liability.
- Income Reporting – Reports your total crypto income from staking rewards, mining, cash back and other earnings.
- Lower Pricing – Starts at just $149 per year for active traders. Cheaper than CoinTracking.
- Mining Support – Deduct business expenses from mining and properly files rewards.
While CoinTracking edges it out in the number of integrations and audit guarantee, ZenLedger beats it in price for larger transaction volumes with thorough harvesting loss capabilities.
- CryptoTrader.Tax – Excellent For Data Imports
CryptoTrader.Tax caters to both investors and tax professionals alike needing to prepare accurate crypto tax filings.
Why it stands out:
- Intuitive Interface – Easy to onboard and import hundreds of exchanges via API connections. Managing transactions and viewing reports is simple.
- Tax Planning Tools – Enables scenario modeling to optimize future tax planning strategies. Answer “what if” questions before executing trades.
- Tax-Loss Harvesting – Automated loss reporting across assets realizes deductions to reduce tax obligations.
User reviews consistently highlight CryptoTrader.Tax for its seamless exchange connections, transparent pricing, and ability to handle large transaction volumes smoothly. The tax planning tools also help traders make smarter moves to lower future taxes.
- TokenTax – Great for DeFi and NFTs
TokenTax fills a specialty niche, catering to crypto power users interacting heavily with newer platforms like DeFi protocols and NFT marketplaces that more generic tools may not cover adequately.
Why TokenTax stands out:
- NFT and DeFi Focus – Provides comprehensive transaction support for #NFTs bought/sold across different marketplaces both on Ethereum and other chains. Handles DeFi governance tokens, liquidity pools and yield farming events.
- Crypto Donations – Enables properly reporting charitable crypto contributions and maximizing deductions. Provides needed documentation.
- Free Tax Consultations – Get expert guidance specific to your crypto taxes included for no additional fees. Access CPAs to clarify your return.
So for hardcore DeFi, NFT and metaverse users, TokenTax has proven itself very capable at handling these expanding use cases. Just be aware that the pricing starts higher given the specialty functionality.
- Koinly – Best Free Option
Koinly provides a generous free crypto tax plan covering up to 100 transactions – making it the best free tool for basic filing needs.
- Hundreds of Integrations – Even on the free plan, connects with most major exchanges, wallets, DeFi platforms and NFT sites. API and CSV imports supported.
- Error Checking Algorithms – Transactions cleanly reconcile across platforms, eliminating reconciliation errors through automation.
- Responsive Support – Koinly prides themselves on providing customer support and tax advice for any questions that come up.
- Scales to Any Size – While free for up to 100 transactions, Koinly’s paid plans scale to handle any crypto trading or transaction volume based on tier pricing.
Koinly makes it easy to handle low to medium trade volumes, with plans starting as low as $49. If you only dabble in crypto investing or have minimal transactions, the free version should suffice. Power traders will want higher tiers or unlimited pricing plans available as well.
Choosing the Right Crypto Tax Software
With the top solutions compared, several key factors can determine which crypto tax software makes most sense for your specific situation.
- Transaction Volume & Frequency
For casual traders with just a handful of buys/sells per year across one or two centralized exchanges, even a free tool like Koinly should meet needs.
But frequent traders, sophisticated DeFi/NFT users, and those interacting across 5+ platforms will find paid tools like CoinTracking and ZenLedger much smoother for reconciling high transaction quantities. These can auto-import thousands of trades seamlessly.
- Required Reporting & Tax Forms
All five of the covered crypto tax tools can handle capital gains/loss calculations, produce needed tax forms like Form 8949 and Schedule D, plus generate income reports for crypto interest.
But specialty reporting around mining deductions, charitable donations, liquidity pools or handling complex NFT transactions varies. TokenTax excels here.
- Support Options
This crypto tax software comparison only included highly rated options based on user reviews and tax expert vetting.
That said, CoinTracking notably stands out with their Audit Assistence Protection service – providing guaranteed CPA support if you’re audited. For complex filing cases, that peace of mind is meaningful.
- Price Considerations
Koinly shines if you want a basic free tool, while CoinTracking and TokenTax justify higher pricing with extensive functionality for advanced crypto users.
But otherwise, most paid plans fall in the $150 to $300 range annually supporting the needs of typical active crypto traders. Going beyond this often provides diminishing returns unless you transact with crypto prolifically across many protocols.
- Ease of Use
Ideally, your tax software should minimize manual work, even if you are a sophisticated crypto power user. API connections, intelligent matching algorithms, seamless reconciliations and an intuitive interface ultimately speed up tax preparation.
Platforms like CryptoTrader.Tax, Koinly and ZenLedger shine here for smooth onboarding and automation.
Do You Still Need Help With Cryptocurrency Taxes?
Even with the right DIY crypto tax software, filing taxes on complex cryptocurrency activity can still be daunting. This guide has only scratched the surface of successfully reporting crypto.
If you need additional support preparing accurate returns, connecting with a crypto-savvy CPA firm is recommended.
We specifically recommend ABC Crypto Tax Experts for optimal cryptocurrency tax preparation and filing.
Some key reasons why partnering with their tax professionals will set you up for crypto tax success:
- 5+ Years Focused Exclusively on Crypto Taxes – Vast experience handling every crypto tax scenario.
- CPAs Specializing in Cryptocurrencies – Credentials focused specifically on complex virtual currency taxes.
- Comprehensive Tax Planning – Proactively models tax implications before you trade.
- Ongoing Audit Support – Will defend your tax filings if the IRS later has questions.
Filing cryptocurrency taxes continues increasing in complexity with evolving regulations and reporting requirements. Rather than risk mistakes or leaks through consumer DIY tools, leveraging proven crypto tax CPAs guarantees an optimal result.
I hope this guide has provided a helpful starting point for choosing the best crypto tax software to simplify your cryptocurrency tax reporting. Let me know if you have any other questions!