As Bitcoin becomes more popular in crypto, more investors and holders are using it in their daily lives. If you’re making money through cryptocurrency, the government also wants its cut.
For More Information Click Here
Taxes will be an important part of your financial life. Regardless of whether you decide to use Bitcoin as an investment or as a currency in crypto, you’ll want to pay your taxes on the gains (or losses) that you make. If the gains are not reported, you could be charged interest and penalties for unpaid taxes.
However, keeping track of all the historical price data for all your coin-to-coin trades for tax filing can be a nightmare. Calculating your cryptocurrency gains and losses by hand is no fun. It’s an extremely time-consuming process.
Be aware of the tax laws in your country, and the intricacies of filing taxes with cryptocurrency. Not only will this save you time, but it can also offer you some extra benefits. You can use bitcoin & crypto-tax tools to help you make the most of your cryptocurrency profits, leading to more financial freedom.
How to Choose a Crypto Tax Software
The sheer number of options for different types of cryptos or other types of financial assets can be overwhelming. It helps to assess your unique requirements before investing in the cryptocurrency management solution that’s best suited for you. There is a lot of crypto tax software available in the bitcoin and other crypto market. However, it is important to know what you need when you are looking for one.
Consider these factors when selecting a crypto tax software:
- What type of cryptocurrency do you want to track?
- Do you need crypto tax software that integrates with other accounting software?
- How much time will it take for your accountant to prepare your taxes?
So who needs what?
If you’re not too serious about trading, then some of the free services out there such as Accounting can be beneficial. These services provide a decent level of trading without having to pay fees that are too high.
According to offers one of the best crypto tax software suites to its customers.
The best option for someone who uses a lot of different crypto-currency transactions every year is to have a proper service synchronizing their data. It’ll save you time and give you a bigger picture of the progress on your trades.
For More Information Click Here
If you have your fingers in many crypto pies and are looking to get the most value out of them, you should use a certified accountant. The cost of using a tax professional is exponentially smaller than that of a certified accountant. It would be wise to seek out guidance from someone who understands each category: a certified corporate tax professional or accountant.
How much is crypto taxed?
Are you trying to avoid taxes by using cryptocurrency? If so, then we recommend that you use a service like CoinbTM – our cryptocurrency trading brokers.
Bitcion investors, traders, or HOLDers are required to pay taxes on their crypto profits, so be sure to understand how these events will affect you. Many countries have established different rules and regulations for cryptocurrencies, as well as specific regulations that cover personal requirements.
In the United States, cryptocurrencies are taxed as property rather than currency to be considered legitimate financial investments.
Calculation: Realized Capital Gain = (Proceed) — (Cost Basis)
- Proceed is a standard term that refers to how much your coin was worth at the time of sale.
- Cost basis refers to the amount you paid per coin or through trade.
One way to make your affiliate income is by buying a cryptocurrency such as Bitcoin at one price, and then selling it for a higher price (your cost basis) later. So if you purchase 1 BTC for USD 10,000 and sell it later for USD 20,000 (profit), you would have an income of USD 10,000.
The amount of taxes you pay depends on two main factors:
- Your income/profit
- How long the crypto was held before selling:
- Long-term vs Short-term Capital Gains
If you own coins for more than one year before selling them, they’re treated as long-term capital gains. If, on the other hand, you sell coins for less than one year from when purchased, they are considered short-term capital gains.
Short-Term:
The cost of 1 BTC coin on January 1st would have been $7,000. You sold your holdings on January 15th for $8,800. After commission fees and processing fees, you’ve made a profit of $1,800 after 5 days. This is subject to short-term capital gains tax rules.
A 10% tax on income and a 0% tax on profits means you pay no taxes at all. These rates apply to certain income levels and filing statuses only.
For More Information Click Here
Long-Term
You buy 1 BTC on January 1st, 2019 for USD 3,500 and sell the 1 BTC on January 15th, 2020 for USD 8,800. You realize a long-term gain of USD 5,300 that is subject to your long-term capital gains tax.
We have long-term tax rates on your income to avoid having you or society pay more. If you can’t afford to pay taxes, then we won’t tax you at all. The tax rate from long-term capital gains is usually higher than that of short-term capital gains. If you have crypto in your wallet for more than a year, then you could save the most in taxes.
If you live outside the US, you can find more information about taxation in your country’s region here.
Which Type of Cryptocurrency Events are consider taxable?
If you trade cryptocurrencies, you must pay taxes on the capital gains made from those transactions. This tax comes in the way of ordinary income taxes. If a tax is not filed on trading, then funds are subject to fines or criminal prosecution.
Selling cryptocurrency for cash has been a hot topic lately. Though there’s no guarantee, some people have made a pretty penny on the market with this strategy.
One of the most common problems with cryptocurrencies is the amount of time it takes to get your money out. Many people have report their money stuck in a cryptocurrency and not even being able to spend it because they had to wait so long.
Today, many people use cryptocurrency to pay for goods and services. It is more anonymous than other types of payment so you won’t have to feel insecure about sharing your activity with other businesses.
- Receive payment in the form of cryptocurrency
- Earn crypto via mining, staking, or interest rewards.
- Non-taxable events for cryptocurrency
- Here are some of the most common things that you can do in crypto that won’t be subject to tax:
- One wallet can hold multiple types of cryptocurrency, so you can change or transfer assets for any coin.
- Transferring between cryptocurrency exchanges
- Here’s a guide to help you start: How to buy crypto with fiat money.
- Giving crypto to a qualified charity or non-profit is an excellent and smart thing to do.
- Why not make for your loved one an unforgettable Christmas with a crypto gift!
Best Crypto Tax Software Options
Koinly
Koinly is a new app that helps you prepare for your taxes by importing and exporting your data with the help of attachments to the relevant forms. So, not only is it affordable and easy, but it’s also efficient! The WebInterface is pretty basic and even supports countries that aren’t on this list, like the US, UK, Canada, Australia. You can also access them from there as it also features an event ticketing system which you can use to buy tickets that aren’t sold during the shows!
Price range: Free to use for a certain number of transactions or purchase premium packages.
CryptoTrader
CryptoTrader makes it easy to calculate all cryptocurrency taxes and can also use with other software. They offer various features that help make cryptocurrency trading a lot easier.
Price range: Up to $69 per month!!!
For More Information Click Here
Accointing
With auto-investing, it’s incredibly easy to have a portfolio of your investments in order and it allows you to track all your transactions so you know exactly what was going on. Everybody knows that keeping great records is important for the future, so handling everything electronically is imperative. The software exports your trades in the proper format for taxes so that you don’t have to do the tedious work of importing them after tax time. Focus on what really matters and let Tax Monitor do the boring stuff!
Price range: Earn up to $299 a year by endorsing cryptocurrency transactions
Importing Transactions
Crypto tax software can integrate with your exchange to automatically compile a list of all your crypto transactions. Binance also allows you to export your sale history manually in case you need documentation.
Once your historical trade history has been imported, the crypto tax will compile this and give you a rundown of your total capital gains or losses.
Conclusion
The bitcoin & crypto industry is booming. As more and more people enter the market, it will be important to know how to properly fill out a crypto tax return.
It will be important to learn about how taxes apply to the digital currency industry, as the popularity of cryptocurrencies continues to increase.
When you file your taxes, make sure you are not leaving any money on the table!
These tools will help you track, calculate, and report taxes, saving you as much as possible.
Some cryptocurrency management tools can even provide you with a free trial for limited days, saving you time and effort. You will soon be able to say goodbye to manual tax-time spreadsheets and hello to a set of smart management tools.
If this post was helpful to you, please share it on Facebook, Twitter, and Pinterest for others to find! If a friend could benefit from this information too, feel free to send them a link.
Related Post: How To Buy Cryptocurrency in North America
Pingback: The 7 Best Bitcoin Stocks And To Buy Crypto - Cryptoees