As Tax season approaches, you will want to get a handle on your crypto taxes, especially for DeFi. We’ll go over some of the top crypto tax software for both DeFi and centralized exchanges.
Crypto tax software has become an essential tool for cryptocurrency traders and investors. As more and more people learn about crypto and enter market, the need to properly report these assets for tax purposes increases dramatically. Because of the sheer number of transactions that you can have with crypto, it really helps to have the appropriate software to help track and calculate your gains and losses. In the rest of this post, we will explore the benefits of using crypto tax software and provide an overview of some of the best options available on the market today. Whether you are just a beginner to the crypto world, or a seasoned crypto trading veteran, this guide will give you a few recommendations on crypto tax software to help you find the best solution for your needs.
Here’s a summary of the top 4 softwares that I go into detail about. You really can’t go wrong with any of them, and I would recommend you decide based on number of transactions you need and whether you like the user interface.
|Price / Transactions
|$49 / 100
$99 / 1000
$199+ / 3,000+
|$49 / 100
$149 / 5,000
$399 / 15,000
$999 / Unlimited
|$49 / 100
$99 / 1000
$179 / 3,000
$279 / 10,000+
|$65 / 500
$199 / 5,000
$3,499 / 30,000
What is DeFi Tax Software?
DeFi tax software is a tool designed to help individuals and businesses keep track of their DeFi investments and accurately report the resulting crypto gains and losses for tax purposes. The software works by automatically tracking transactions, recording your cost basis, calculating gains and losses, and generating reports for any given tax year in a format that can be easily submitted to tax authorities. You simply have to connect your DeFi wallet to your tax software.
Some DeFi tax software also integrates with popular DeFi platforms, allowing users to seamlessly import transaction data and generate accurate tax reports without having to manually enter information.
Benefits of Using DeFi Tax Software
Increased Accuracy: DeFi tax software eliminates the need for manual calculations, reducing the risk of errors in tax reporting. The software automatically tracks transactions, calculates gains and losses, and generates reports in a format that can be easily submitted to tax authorities. It will automatically keep track of your cost basis, so you don’t have to track it yourself.
Time Savings: DeFi tax software saves users time by automating the tracking and reporting process, reducing the need for manual entry and calculations. This can be particularly beneficial for individuals and businesses with large portfolios and complex transactions.
Cost savings: Some softwares will help you estimate your tax burden by simulating taxable events and helping you forecast your tax burden for the year. They will also help you understand your crypto gains and losses for a given tax year so that you can work to offset them with late year transactions.
Easy Integration: Many DeFi tax software solutions integrate with popular DeFi platforms, allowing users to easily import transaction data and generate accurate tax reports. This makes the process of tracking and reporting DeFi investments quick and easy.
Compliance: DeFi tax software helps individuals and businesses stay compliant with tax laws by ensuring accurate reporting of gains and losses. This can help to reduce the risk of penalties and other legal issues.
Best DeFi Tax Software Options
CoinTracker is another popular DeFi tax software solution that provides automatic tracking of DeFi transactions, capital gains calculations, and tax report generation. It also integrates with popular DeFi platforms, including Uniswap, Compound, and Aave. Some of the benefits of CoinTracker include:
- Automated transaction import: CoinTracker can automatically import transactions from major exchanges and wallets, making it easy for users to track their crypto transactions.
- Tax form generation: CoinTracker can generate all the necessary tax forms for filing taxes, including Form 8949, which is used for reporting capital gains and losses.
- Capital gains and losses calculation: CoinTracker can calculate capital gains and losses for users, which can help them to minimize their tax liability.
- Tax loss harvesting: CoinTracker can identify opportunities for tax loss harvesting, which can help users to offset their capital gains and reduce their tax liability.
- Integration with accounting software: CoinTracker integrates with popular accounting software like QuickBooks and Xero, which can make it easy for users to reconcile their crypto transactions with their traditional financial transactions.
- User-friendly interface: CoinTracker has a user-friendly interface, which makes it easy for users to navigate and understand their crypto taxes.
- Security: CoinTracker uses bank-level security to protect user’s data and transactions.
- Customer support: CoinTracker offers customer support through email and live chat, which can help users to quickly resolve any issues they may have.
- Cost-effective: CoinTracker is cost-effective compared to other crypto tax software on the market.
- Portfolio tracking: CoinTracker also allows users to track their portfolio, which can help them to understand the performance of their investments and make informed decisions.
2023 starting price: $53
The best crypto tax software depends on individual needs, but some factors to consider when choosing a software include:
- The ability to import transactions from multiple exchanges and wallets
- The ability to generate tax forms for filing taxes
- Features for calculating capital gains and losses
- User-friendliness and ease of use
- Security and data privacy
- Integration with accounting software
It is also important to note that the best crypto tax software for you may not be the cheapest. Take into consideration the number of transactions you have and think you may have in the future so you can potentially upgrade if you have a lot of trades in one year. Whatever you end up choosing will help you to accurately report your gains and losses and avoid any penalties from IRS.
Another important feature to consider is the level of customer support provided by the software. Some crypto tax software companies offer live chat and email support, while others may only offer support through a knowledge base or FAQ section. It is important to choose a software that offers the level of support that you feel comfortable with.
To summarize: the best crypto tax software will depend on your individual needs and preferences. It is important to research and compare different options, and choose one that offers the features and support you need to accurately report your crypto taxes. It is also important to work with a tax professional to ensure that you are reporting your crypto taxes correctly and to avoid any penalties from the IRS.