CoinTracking, founded in 2012, holds the title of the world’s first crypto tax software and portfolio manager. However, as the cryptocurrency market goes mainstream, CoinTracking is starting to struggle to meet the needs of a fast-paced and evolving cryptocurrency industry.
For instance, users who gave it a 1-star rating on Google play store complained about the tedious setup process, inaccurate fiat-to-crypto balances, and the lack of in-depth overview, analysis, and reporting for the emerging class of crypto products and services such as DeFi, Staking, and Margins.
CoinTracking still does a decent job if you are a hodler; however, if you are an active trader, day trader, or DeFi enthusiast with hundreds of monthly trades, you need a robust tool that can generate accurate tax reports so that you can correctly assess your tax obligations.
In this piece, we list some popular Cointracking alternatives and we also cross-reference their strengths against their weaknesses based on user reviews. We are confident that this information will help you make an educated decision on the best crypto tracking software and tax reporting tool to use in 2021.
CryptoTaxCalculator.io was founded in 2018 by crypto native and software engineer, Shane Brunette after he found it incredibly difficult to document his crypto positions and calculate his tax obligations after 2017’s ICO rush. In the last two years, the CryptoTaxCalculator.io platform has undergone rapid development, user-testing, and iteration to accommodate the vast complexity of cryptocurrency tax calculations at a global level while hiding this complexity behind a simple and intuitive interface.
Source: Crypto Tax Calculator
The biggest selling point of CryptoTaxCalculator is that it only requires you to connect your exchange data or public wallet address, and it imports and categorizes your on-chain transaction history and going as far as sorting ICOs, stolen or lost funds, DeFi, Margin, Futures, and others to calculate your taxes accurately and in the shortest time possible.
Cointracker.io, prides itself on analyzing your crypto trades and generating real-time reports on profit and loss, realized and unrealized gains, and computing the fiat value of your coins. It also provides a free service that provides you with free tax reports if you place less than 100 trades in a year.
One of the major disadvantages of CoinTracker is that it seems to be built specifically for the U.S. market. Hence, you may not get your exact tax reporting requirements met if you don’t live in the U.S. or if you use non-U.S crypto trading platforms.
Koinly.io helps you generate crypto tax reports in line with the tax code in more than 20 countries including Canada, UK, Germany, and Sweden. Apart from generating reports from exchange accounts and public wallets, Koinly.io can also import transaction data from hardware wallets such as Ledger and it can intelligently detect crypto transfers between your own wallets to ensure you don’t overpay your taxes.
One of the major drawbacks of Koinly.io is the pricing. You can access its crypto portfolio tracking for free but you need to be ready to pay between $79 to $399 per year to use the tax reporting feature, depending on the volume of your trading transactions. The more annoying part is that you can’t pay for the Koinly.io service with crypto. The fact that a crypto tracking solution won’t accept crypto payments raises questions about its conviction on the future of the crypto industry.
Cryptotrader.tax was founded in 2018 after the 2017 ICO frenzy. Cryptotrader.tax provides a simple way to calculate your crypto tax liability using the same methods tax professionals use such as FIFO and LIFO. The best part for U.S. users is that you can download completed IRS forms that you can file, upload into tax software such as TurboTax or send to your accountant to file on your behalf.
The major downside to using Cryptotrader.tax is that it can only compute your tax report on the trading activities on exchanges. Any other crypto transactions conducted via your public wallets, hardware wallets, or a CEX will not be accounted for, and that leaves you with potential tax troubles down the line if you forget to account for such transactions. Also, Cryptotrader.tax employs a weird pricing system that allows you to upload your trading transaction for free but you’ll need to pay between $49 and $299 to view and download your tax report depending on the number of transactions analyzed.
TokenTax.co is a software platform for calculating cryptocurrency tax, but beyond that, it doubles as a full-fledged crypto tax accounting firm and it also provides CPAs and tax experts with professional-grade solutions to reconcile transactions and generate tax forms for multiple clients at a time. TokenTax.co also prides itself on its Tax Loss Harvesting feature that highlights your unrealized gains and losses so that you make strategic decisions to reduce your taxable gains.
Source: Product Hunt
The downside to using TokenTax.co however is that it doesn’t seem to have support for reconciling P2P trades, crypto transactions from public wallets, or transactions from hardware wallets. Also, TokenTax.co has an overly U.S.-centric tax reporting system that doesn’t quite meet the crypto tax reporting needs of users in other countries.
TaxBit.com was founded in 2018 by two brothers, Austin Woodward who is a certified public accountant (“CPA”), and Justin Woodward, who is a licensed tax attorney. TaxBit.com helps both individuals and enterprises sort through their crypto transactions and file accurate crypto taxes with a unified suite of tax products. A key selling point for TaxBit.com is its IRS compliant outputs that include IRS 8949 tax forms and an IRS audit trail.
One of the downsides to using TaxBit.com is that there’s some opacity in how it calculates the number of eligible transactions that each of its pricing tiers covers. Its basic plan which costs $50 per year covers tax reports for 250 transactions, the Plus+ plan for $175 per year covers 2,500 transactions, and the Pro plan for $2,500 per year covers 25,000 transactions. TaxBit.com reportedly looks beyond your main trades to identify each step of a thereby racking up the total transactions and forcing you to upgrade to the next tier before you can access your tax reports.
Bear.tax is one the simplest crypto tax software solutions available in the market today. The platform has a simple UI, its ‘smart matching’ algorithm intuitively matches deposits and withdrawals to avoid setting up negative balances that could skew your tax report. Bear.tax also has one of the cheapest prices for crypto tax software, starting at $10 per annum and maxing out at $200 per annum for unlimited crypto transactions. Bear.tax also provides a simplified view of when you bought, sold, or traded your tokens with the corresponding tax liabilities.
The major downside to Bear.tax is that its reach is somewhat limited to about 25 crypto exchanges. To its credit, it is integrated with a mix of centralized and decentralized exchanges, but the low number reduces the chances that most dedicated traders will be able to get comprehensive tax reporting on their crypto trading activities.
Zenledger.io is a crypto tax software focused on simplifying the process of computing the applicable taxes in DeFi and crypto transactions for traders, investors, and tax professionals. It provides line-by-line accounting output, deploys a tax-loss harvesting tool, and it supports all the major crypto wallets and exchanges.
The major downside to Zenledger.io is its irregular pricing. If you have less than 25 crypto transactions per annum, you can use Zenledger.io to compute applicable taxes. The starter plan costs $49 per year but it will only record 100 transactions and it doesn’t include DeFi products. However, if you want to include staking, DeFi, and Margin crypto transactions, you’ll need to move the pricing plans to the Premium tier costing $149 for up to 5000 transactions.
Since 2014, the IRS has required all cryptocurrency traders (and miners) to report and pay taxes on their income and the tax authorities in many different jurisdictions have similar regulations.
The potent mix of an unrelenting bull market, vocal support from tech leaders, rising institutional adoption, increased regulatory clarity and thousands of DeFi solutions with practical applications means that crypto traders can no longer fly under the radar in filing accurate tax reports.
Thankfully, the crypto-industry is recording an ecosystem-wide growth that brings in ancillary services such as taxes, insurance, and custodial services among others. We are excited by the growth and we can’t wait to see a time when crypto tax software becomes as mainstream as traditional tax solutions.
Source link: https://coincodex.com/article/10967/best-crypto-tax-software-cointracking-alternatives/