Is Crypto Trader Tax Legit

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These accounting methods work exactly as they seem. For first in, first out, the asset (or cryptocurrency) you bought first is the one that sells first. So, you have your crypto essentially in the same order that you first acquired it. Schedule 1 – If you earned crypto from airdrops, forks, or other crypto hobby income, it is generally reported as other income in Schedule 1. (Not taxable for the self-employed.) The gross product represents the value that will be received in exchange for the sale of your crypto asset. Generally, this is the fair market value of your assets at the time of sale. CryptoTrader.Tax shines in this aspect with integration into almost every well-known exchange in the crypto world – from big ones like Coinbase, Binance, Krakento to small ones like Mercatox, Lykke or Bitrue. On the other hand, if you`ve earned cryptocurrency — whether from employment, mining, participation, or interest rewards — this earned income is generally treated as ordinary income and reported as such. The second you transfer cryptocurrencies in or out of an exchange, that exchange loses the ability to give you an accurate report based on the cost of your cryptocurrencies, one of the mandatory components for tax filing. To file your taxes, you usually need to keep track of the name of the cryptocurrency, the date you received it, and the date you sold or traded it. This would help track the cost base, profits, selling prices, and other relevant information. To determine the order in which you sell different cryptocurrencies, accountants use certain accounting methods such as first in, first out (FIFO) or last in, first out (LIFO).

The default method is first in, first out. To make things easier for investors, CoinLedger generates a comprehensive revenue report, which is included in your completed crypto tax reports. This report details the U.S. dollar value of all cryptocurrency revenue events you received during the year: mining, staking, airdrops, etc. This income report can be used to fill out your relevant normal income tax forms, such as Schedule 1, B, and C. Bear.Tax is another solid choice among these platforms that will help you calculate your taxes. It has all the necessary features to help you calculate your crypto taxes. It provides data import from all available exchanges. From there, it pushes the received information via top-notch profit/loss calculators.

The smart matching algorithm can help you identify transactions that are not taxable instead of just adding them to your returns. It also offers the most accurate historical prices. This is a feature that sets it apart from the competition. Professional traders will surely appreciate when it is time to tackle taxes on cryptocurrencies. However, this tool stands out as a software for accountants who want to take more clients and their crypto taxes in the most efficient way. Unlike other solutions, this solution allows your customers to maintain their privacy without sacrificing the quality of their reports. The basic plan of this tool costs $49 per year for up to 200 transactions. The next tier costs $149 per year for up to 25,000 transactions, and the higher-tier plan will cost you $499 per year for 1,000,000 transactions. If you don`t feel ready to pay much for crypto tax software and are willing to plan ahead, TaxBit might be the right choice for you. In the free plan, you can add unlimited transactions and generate your tax reports for free – provided you`ve used the services of one of the more than 500 businesses under the TaxBit Network Partner Program. TaxBit`s free plan covers the basic needs of most merchants, but if your plan goes beyond that, you`ll need to sign up for one of the paid plans, all of which support unlimited transactions and wallet addresses.

The first paid plan, Basic, starts at $50 per year and allows for both historical tax forms and off-network transactions. The next tier, Plus+, costs $175 per year; Finally, Pro costs $500 per year. Your cost base in the newly received cryptocurrency becomes the income you record. Just like other forms of ownership (such as stocks, bonds, and real estate), you incur capital gains and losses on your cryptocurrency investments when you sell, trade, or dispose of your crypto. If you need help calculating your crypto taxes as accurately as possible, CryptoTaxCalculator could be a godsend. Not only does this software integrate seamlessly with many popular exchanges, but it also uses the data to offer very detailed calculations. This tool even takes into account parameters such as airdrops, staking, mining, DeFi staking rewards, and participation in the ICO. Its algorithm calculates them and creates tax reports for you. These will clearly describe your capital gains and realized income. From there, you can easily import the data into your tax software or pass it on to your accountant.

You`ll also want to use CryptoTaxCalculator if you`re outside the US. It supports countries such as Greece, Japan, Portugal, the United Kingdom and many others. Many new countries are likely to be added to the list in the coming years. In addition, the price is relatively cheap. The rookie plan starts at $49 and covers up to 100 transactions in a tax year. The Hobbyist plan costs $99 per tax year (up to 1,000 trades), the Investor plan costs $189 per tax year (up to 10,000 trades) and the most expensive plan is Trader, for $299 per tax year and covers up to 100,000 trades. Since users are constantly transferring cryptocurrencies in and out of exchanges, the exchange has no way of knowing how, when, where, or at what price you originally acquired your cryptocurrencies. The exchange only sees when the crypto appears in your wallet and what the USD value was at the time of deposit. The amount of taxes you pay also depends on how long you hold the crypto.