How to use a Crypto Tax Calculator and Which one to choose?

A crypto tax calculator may generate a tax report in four steps:

Connect your exchanges and wallets.

First, import your cryptocurrency trading data into your crypto tax platform. You can import your data automatically via the API, or you can manually upload a Comma Separated Values (CSV) report containing all your trades.

Examine your transactions

Check to see if your transaction history is correct. To ensure correctness, you may need to manually correct or edit some information in some circumstances. 

Create your tax report.

Learn about your portfolio, optimize your cost basis accounting method, and save thousands of dollars on taxes via tax-loss harvesting.

Share your report

Some cryptocurrency tax calculators work with TurboTax, the largest tax filing tool in the United States. This allows you to email your report directly to TurboTax. You can, however, engage a certified public accountant (CPA) to file your report for you.

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What to look for in a Crypto Tax Calculator?

Integrations that are available

Choose the best cryptocurrency tax software that can interact with all of the major exchanges, including Coinbase, Binance, Kraken, and eToro. This allows you to pull in your data and transactions without having to manually key them in. Aside from calculating your earnings, your tax calculator should be able to track the amount of coins you exchanged, the length of time you held them, and the dates of transaction.

Aside from exchanges, you should look for blockchain integrations and support for Decentralized Finance (DeFi) protocols and crypto coins, such as futures, non-fungible tokens (NFT), and mining swap. With further integrations, you’ll be able to generate a more comprehensive snapshot of all your cryptocurrency transactions across other platforms.

Security and reputation

Crypto tax calculators are accurate and trustworthy due to their outstanding reputation. Partnerships with recognised financial technology and accountancy firms are trust markers. You can, for example, rely on a software application developed in collaboration with TurboTax. There is also increased trust in software solutions developed by CPAs and crypto veterans.

Furthermore, ensure that the crypto tax calculator has a good reputation for keeping your information safe. A transparency policy is frequently sufficient to ensure that no one sells the information you offer. When importing data, your bitcoin calculator should use read-only access to your exchange accounts to protect your funds.

Pricing and transaction limit per year

Prices for most crypto tax calculators are determined by the transaction limit. Many sites provide free services for calculating and previewing your tax report, charging just when you wish to download it. This is an excellent approach to determine whether the software’s features are appropriate for your needs before investing any money.

Most calculators also provide a free plan for up to 30 transactions. If you’re a frequent trader, strive for a big volume of transactions at the best possible pricing. Examine the features as well. Lower-tier plans almost never feature complex crypto transactions such as mining and staking. Try the free trial if feasible, keep an eye out for hidden charges, and read the refund policy.

Customer service and ease of usage

The primary goal of cryptocurrency tax platforms is to streamline the tax accounting procedure. As a result, a very intuitive interface is essential for both beginners and specialists to traverse the platform. A crypto tax software should be able to enter your data and prepare your tax return in a matter of minutes, with little error or manual intervention.

A responsive customer service personnel would also be beneficial. You should be able to contact skilled live chat support who can address your concerns and give you additional information on the software. Many crypto tax platforms also provide instructional resources to help users understand digital currency taxes.

Binocs is a platform which manages your crypto exchange taxes and much more just in a click. Check the website now.

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