3 Best Crypto Tax Software for Defi and Cryptocurrency Investors (2022)
In this video we will provide our picks for the 3 best crypto tax software for 2022. Our choices for the best cryptocurrency tax software will work well with DEFI applications and the regular cryptocurrency investor that uses centralized exchanges as well.
RECOMMENDED CRYPTO TAX SOFTWARE – affiliate links
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The year 2021 was a record year for cryptocurrency, where a lot of new cryptocurrency investors traded for the first time in 2021, and the projections for 2022 are looking pretty similar where a lot of people are going to buy and sell cryptocurrency for the first time in this year 2022.
A lot of people are making money in crypto, that’s good, but at the end of the day you always have to pay your taxes. But crypto taxes are very complicated, that’s why we recommend using crypto tax software to make your life a lot easier when tax time comes.
In this video, we’re going to give you our top three choices of crypto tax software for 2022. So let’s go into the content.
Why should you use crypto tax software?
It’s going to help you ensure that you pay the correct amount of taxes on your crypto currency and so to help you avoid IRS penalties. A lot of crypto traders come to our office saying, “but I have an excel sheet where I keep track of everything”, having excel sheet is good for internal purposes, but believe me, keeping track of your cost basis, how you sold it, swaps, NFTs, is very difficult to keep track of the lifespan and the trajectory of a single token from the moment you bought it to the moment you sell it.
To make your life easier, believe me, it is a lot better to use crypto tax software to make sure that you’re paying the correct amount of taxes on your cryptos currency investments.
Also, believe me that it’s going to save you a lot and a lot of money and a lot of money. Why?
When you are trading, when you’re buying and selling crypto, you need to report that on the IRS Form 8949. Now, if you’re used to buying and selling stocks, usually doing this form is a lot simpler than doing it for crypto. Why? Because there’s so many ways that you can make money in crypto, you have staking, airdrops, NFTs, swapping, mining; that is very difficult to keep track of every single transaction for your crypto currency, so it’s a lot better to use a crypto tax software.
I can give you an example that we had a client that came to our office a couple of weeks ago saying “I don’t use crypto tax software; I have an excel sheet and I want you guys to do the accounting for the crypto tax spreadsheet”. I told him “Well, I recommend that you use crypto tax software, because it is going to be way faster and a lot cheaper”, he told me “No, I don’t want to pay for it. I want you guys to do the accounting”. We looked at the spreadsheet and it has over 5000 transactions. So, we told him, “Look, we can do the accounting if you want. It’s going to take us around two weeks to do this accounting for your crypto transactions and it’s going to cost you easily like $3000. But if you use this crypto tax software that we are recommending. You can have that form done in a couple of minutes and you only must spend like 150 dollars”. So that’s why you save time and money, believe me, your CPA is going to love you if you use crypto tax software. That’s one of the reasons we recommend crypto tax software.
How do you choose crypto tax software? You must make sure that it supports the exchanges you are using via API. So, make a list of the exchanges you are using: Coinbase, Binance, Gate IO, Kraken. Kucoin, FTX, crypto.com, just make sure that the crypto tax software integrates with the exchanges you are using. Obviously, price is a factor. If you do a lot of DeFi, then make sure that your crypto tax software integrates with your DeFi wallets and blockchains. Technical Support is very important, even though these softwares are very good, sometimes they are a little buggy and do give many errors at some point during the calculations where you may have to contact support to help you out. So having a good Technical Support in the software is very important and ease of use.
You also want to make sure that if you are doing a lot more than just buying and selling, because remember, you can make money in crypto in many ways, mining, staking, airdrops, NFT’s, yield farming and you got to make sure that the crypto tax software tracks everything you do; if you do NFTs, if you make donations, if you make payments with crypto. You have to make sure, especially swaps, swapping is a misconception that we have seen a lot; many people think that if you have a token and you swap it for another one, that is not a taxable transaction, but it’s. If you’re doing a lot of swapping of token tokens, you may have to pay taxes on that.
Now let’s go to the top three cryptocurrency tax software for 2022. There are a lot of different crypto tax softwares in the market, they are all mostly pretty good, and it all depends on what you need. These three picks are the ones we feel are for the common cryptocurrency investor. If you do more like a business part of cryptocurrency, if you’re doing more mining, then maybe you have a different option, then we will do a different video on that.
CryptoTrader.Tax: This is the number 3 crypto tax software we chose. CryptoTrader.Tax we chose it because it provides the tax report at a great price. It’s very economical, it’s very easy to use. But we’ve found out that it is very good only if you have used centralized exchanges. Most people when they start in their cryptocurrency investment journey, they usually start in centralized exchanges, they usually go through Coinbase, Gemini, Kraken, Binance, Kukoin, these are all centralized exchanges, so if you have been doing those, PayPal now, Robin Hood, these are all centralized exchanges, if those are the things you have been using, then CryptoTrader.Tax is a great option.
Koinly: Now if you have been doing a lot of DeFI, then our number two pick is Koinly. This is our number two pick four cryptocurrency tax software. Why do we like Koinly? Even though from the three options that we are showing, it is the highest price it is worth it, especially if you’re doing a lot of DeFi. If you are doing a lot of trading outside of centralized exchanges, Koinly is the best option for you. It has the most API integrations with exchanges, wallets and blockchains, so it’s going to make it very easy for you. Even though you do a lot of DeFi, you can connect all your wallets, all your DeFi blockchains, all your DeFi wallets into Koinly and and it’s going to make the report very fast and very easy. That’s why we like Koinly, especially for all of you that do DeFi right.
ZenLedger: Our number one pick, four crypto tax software is ZenLedger. Why do we like ZenLedger? It integrates with most of the exchanges, wallets and blockchains, not as robust as Koinly, Koinly integrates with more exchanges and more wallets, but ZenLedger integrates with most of them. What we like about ZenLedger is they have great customer support, if you have a question, if you have issues, they have great customer support and they are very good at helping you out, especially if you’re doing deFi and your wallet does not integrate with ZenLedger, you contact support, and they will find a way to get all the information from that wallet to your ZenLedger account. We also like that they have been working directly with the IRS, they’re advising the IRS, they have a team that works inside the IRS, so they have a lot of good relationships with the IRS. So basically, you can say that the IRS has a seal of approval for ZenLedger. So that’s also very important. So, you’re sure that they’re doing things the right way and making sure that their software is up to date with all the different tax laws.
If you want to use any of these 3 Crypto Tax Softwares, please use our affiliate links:
Zen Ledger Crypto Tax Software – https://zenledger.io?offer_id=16&aff_…
Koinly Cryptocurrency Tax Software – https://koinly.io/?via=E4FBF80B
CryptoTrader.Tax – http://cryptotrader.tax?fpr=cgxkv
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