The Internal Revenue Service (IRS) states that nearly all cryptocurrencies are exchangeable with virtual currencies. That is, they serve as a medium of exchange, a unit of account, and a store of value that can be exchanged for real money. This means that any income or profits made from your crypto are subject to taxation. However, you must consider several factors regarding crypto tax, including its taxation and whether you are required to pay, depending on specific conditions. In this article, I will guide you through the best crypto tax software, tax rates, calculators, and forms.
Key Points
- Crypto taxes apply when you sell, trade, or use cryptocurrency, but simply holding it isn’t taxable unless earned through mining or staking.
- Tax rules and forms vary by location, so keeping accurate records of transactions is essential to simplify reporting.
- Crypto tax software like CoinLedger, CoinTracker, Koinly, and TokenTax makes tax season easier by automating transaction tracking and generating the necessary forms.
- These tools feature tax-loss harvesting, portfolio tracking, and error correction, and support the management of multiple cryptocurrencies, exchanges, and DeFi platforms.
- Cryptocurrencies are classified as either regular income or capital gains and are taxed based on how long you’ve held the asset and whether the transaction is considered short-term or long-term.
Crypto Tax
Crypto tax can be a confusing issue, but it essentially involves the government taking a share of your cryptocurrency gains or earnings. Whenever you sell, trade, or even use crypto to buy something, you could owe taxes as you would with stocks or property.
For example, when you bought some Bitcoin at a low price and it’s now higher, you sell it; that gain is something the government taxes. Similarly, if you trade your Bitcoin for Ethereum or use it to buy a new laptop. So if you’re earning crypto through mining or staking, that’s income too.
But it’s not always easy. You might owe nothing if you hold your crypto and don’t sell or spend it. And the laws can differ depending on where you live, so the entire experience appears to be even more baffling. I have created a checklist below to help make tax time easier for you.
Crypto Tax Checklist
Read Also: Top 10 Crypto Trading Mistakes to Avoid for Beginners (2025 Guide)
Best Crypto Tax Software
When it comes to crypto taxes, they can be stressful and overwhelming without crypto tax software. I remember my first tax season after trading different cryptocurrencies for months. I was overwhelmed and worried about the transactions I needed to report, trying not to forget anything important.
In that difficult situation, I learned the best crypto tax software, which changed everything. These crypto tax software guided me through easy questions and reviewed my transaction history. This made it very easy to see what I needed to pay.
Crypto tax software helped me find ways to use capital loss deductions when I suffered losses in my trading. I was relieved to know that I could save money. Furthermore, I have shared below the best crypto tax software options that can make tax season easier for you, too.
#1. CoinLedger
CoinLedger is a user-friendly crypto tax software that simplifies managing your cryptocurrency taxes. It is less complicated than other crypto tax software because it allows you to complete your crypto taxes within minutes. The software supports integrations and connects with over 350 exchanges, 181 DeFi platforms, and nine wallets, including MetaMask, Trust Wallet, and Exodus. You can track your gains and losses easily throughout the year, even if you are dealing with complex things like swaps or using DeFi platforms like Aave, Uniswap, Compound, or Pancake. This tool makes importing all your trades less difficult, whether you are dealing with cryptocurrencies or NFT.
Key Features:
- Easy Tracking: It monitors your gains effortlessly and losses throughout the year.
- Wide Integrations: CoinLedger connects with over 350 exchanges and 181 DeFi
- Streamlined Trade Importing: This crypto tax software import trades for cryptocurrencies and NFTs with ease.
- Built-in Calculators: This helps determine your tax liability accurately.
- Automated Tax Forms: It generates all necessary tax forms and reports for filing.
Pricing
#2. CoinTracker
You cannot discuss the best crypto tax software without mentioning the CoinTracker tool. This software stands out as one of the best and most trusted, with over a million users relying on it to stay compliant with tax regulations. It provides cost optimization and automated portfolio tracking methods that ensure that crypto tax management is more accurate and accessible.
When I started trading in cryptocurrency, it was a significant headache, especially during tax season. It was then that a fellow crypto enthusiast recommended CoinTracker. At first, I was reluctant because there are many tools out there, but after linking my wallet and exchanges, I felt significant relief because this software helped me track every transaction I made and even categorized them for tax purposes.
Hence, I would personally suggest this software if you are like me and you manage multiple exchanges and wallets. Synchronising them all with CoinTracker will save you hours of typing. Additionally, its tax optimisation features will make sure you do not pay more taxes than you are required to pay.
Key Features
- Official tax partner of top platforms like Coinbase, OpenSea, TurboTax, and H&R Block
- Automated portfolio tracking that supports 500+ exchanges and 10,000+ cryptocurrencies
- Tailored tax support for countries like Australia, Canada, India, the USA, and the UK
- The mobile app syncs your holdings effortlessly with exchanges and crypto wallets
- For users with over 1,000 transactions, custom pricing plans are required
Pricing
#3. Koinly
This is one of the best crypto tax software that offers a simple and easy-to-use interface with powerful features that make it suitable for beginners. I have been managing my crypto assets for some time now, and Koinly is another software that can help you go through tax season easily. It has an easy setup where you can connect your exchanges and wallets, and it has helped me some time ago import all my trade and transfer, saving me hours of manual work. The smart tax reports and accuracy will help remove the stress of filling, so make it your go-to tool.
Additionally, its simple and powerful features make it ideal for anyone, whether beginners or seasoned traders. Its tiered pricing gives you options for every budget.
Key Features
- Supports 17,000+ cryptocurrencies
- Compatible with 400+ exchanges and wallets
- Available in over 20 countries
- Generates international tax reports
- Tracks your portfolio
- Smart transfer matching to avoid taxing transfers between your own wallets
- Supports margin and futures trading
- Income tracking for mining, staking, lending, etc.
- Tools to fix errors and ensure accurate tax reports
- Free trial with no time limits
Pricing
#4. TokenTax
When you talk of TokenTax as being one of the best crypto tax software, it is all about how easy it integrates with different exchanges, protocols, and wallets to allow you to manage your crypto taxes more conveniently. Apart from that, it includes a tax loss harvesting feature and automatically generates tax forms. It makes it simpler, saves you on your tax bill, and filing just becomes a cakewalk.
Additionally, TokenTax’s association with expert crypto accounting experts and reconciliation teams makes it one of the best. They provide intensive crypto, DeFi, and NFT insight to ensure that you are always supported throughout.
Key Features
- Tracks your portfolio
- API and wallet integrations
- Supports DeFi and NFTs
- Margin and futures trading support
- Tax loss harvesting dashboard
- Reports for mining and staking income
- Automatically generates tax forms
- Expert human guidance
- Full filing services are available
- Identifies and corrects errors or missing data
Pricing
#5. Crypto Tax Calculator
For those seeking affordable solutions to handle their cryptocurrency taxes, the Crypto Tax Calculator is a suitable option; each plan offers unlimited integrations, innovative features, and numerous tax reports. You only need to pick anyone who matches the number of transactions you need. Moreover, it offers a 30-day free trial and a 30-day money-back guarantee, allowing you to test it out.
Some time ago, after using various tools, I felt that they were costly and rigid. I stumbled on the Crypto Tax Calculator and was impressed by how easily it connects everything. I set it up and watched as it imported all my trades without a hitch. The transfer matching feature was beneficial and ensured I wasn’t taxed on my internal wallet transfer. My experience with this software gave me peace of mind as I didn’t break the bank, and I also appreciated the 30-day money-back guarantee. Here is a step-by-step video to enable you to understand better.
Key Features
- Supports 500+ integrations
- Available in over 20 countries
- Tracks your portfolio
- Compatible with NFTs, DeFi, and DEX trading
- Provides reports for all financial years
- Transfer matching algorithm to avoid double taxation
- Error handling tools
- Help desk and chat support
- Free trial
Pricing
Read Also: How to Make Money in Crypto: Expert Tips and Strategies for Success
Crypto Tax Form
A crypto tax form is what you’ll need when it’s time to tell tax authorities like the IRS in the U.S. or HMRC in the UK about your cryptocurrency transactions. Like stocks or real estate, crypto is treated as property for tax purposes. This is to indicate that whenever you buy, sell, or trade crypto, you need to report any money you earn or lose from the transactions.
Please don’t panic, however; it’s not as complex. For example, let’s say you acquired Bitcoin for $20,000 and then sold it at $30,000. The $10,000 you made is something you will need to report on your taxes.
Conversely, if you can sell it for $15,000, that’s a loss you can write off, which can lower your tax bill.
Why does it matter? The taxman wants a cut of your gains, but here’s the silver lining: losses can sometimes work in your favour by lowering your overall tax bill. Therefore, it is essential to maintain accurate records, as this will make tax season easier and potentially save you money.
Whether you’ve been trading crypto for years or just started with Bitcoin or Ethereum, reporting your transactions is part of the process. Always remember that the trick is staying organized and keeping track of everything. And remember you’re not alone. Millions of crypto holders are doing the same thing, so you’ve got company.
Types of Crypto Tax Form
The following are the forms of crypto tax that you may encounter and their relevance to your situation.
Tax Forms Sent to You:
#1. Form 1099 (K or B)
This cryptocurrency tax form is based on the level of activity you have in the crypto market and the exchange you are using. If you sell, trade, or purchase cryptocurrency, your exchange will report your activity to the IRS through either Form 1099-K or Form 1099-B. The 1099-B will usually report your capital gains or losses, but the 1099-K shows you a summary of your activity, especially if you’ve moved a lot of crypto.
When I get a 1099-K, I know it does not provide me with all the information I need. For instance, it generally does not display my cost basis—the amount I initially invested in my crypto. I have found that with a 1099-K, I need to review my records to accurately determine my gains or losses. It might feel like extra work, but being organised and ready with your history of transactions makes it simpler.
#2. Form 1099-NEC
If you’re a freelancer or independent contractor who earns payment in cryptocurrency for your work, you’ll most likely receive Form 1099-NEC. It’s a crypto tax form used to report income you’ve earned through your labour, and yes, that does include payments made to you in cryptocurrency.
Even if you receive payment in Bitcoin or any other cryptocurrency, the IRS deems it as income, just like cash. For instance, if you received payment of 1 ETH at $2,500, you would report $2,500 as income on your tax return.
#3. Form W-2
If your employer pays you in cryptocurrency instead of regular money, you’ll get a W-2 just like if you were paid in dollars. Your employer will report the fair market value of the crypto you were paid on the day you received it.
Imagine getting paid in crypto from a forward-thinking employer while it’s exciting, you’ll have to keep track of the value when you receive it to ensure you’re reporting your wages correctly on your taxes.
Tax Forms You Need to Complete:
#1. Form 8949 (Capital Gains and Losses)
You’ll need to fill out Form 8949 if you’ve sold or traded any cryptocurrency, as this is where you report your capital gains or losses. The trick here is to ensure you enter the correct numbers, especially if you received a Form 1099-B from your exchange, which often includes a summary of your transactions.
If you get a 1099-K, you must take a more hands-on approach. That’s because this form doesn’t always show your cost basis the original value of your crypto. So, you’ll have to dig up that information yourself. This step is vital for accurately calculating your gains or losses when filling out Form 8949.
#2. Form 1040 (Individual Income Tax Return)
Everyone’s favourite tax form! If you’ve had any capital gains or losses, you’ll transfer those totals from Form 8949 onto your Form 1040 (specifically on Schedule D). But that’s not all:
- If you’ve earned wages in crypto (your employer pays you in Bitcoin), you’ll report that amount as wages.
- If you were paid in crypto for freelance work or services, you’ll report this income either as other income on Schedule 1 or as self-employment income on Schedule C.
So, think of this as a puzzle where all the pieces fit together Form 8949 handles your trades, Form 1040 handles your overall tax situation, and everything feeds into one place for the IRS to get the complete picture of your crypto activity.
Lastly, on your Form 1040, there’s a small but important checkbox that asks: “At any time during the year, did you receive, sell, send, exchange, or otherwise acquire any financial interest in virtual currency?”
You’ll need to answer “yes” or “no” to this question, so don’t overlook it! Even if all you did was receive some crypto, you have to declare it.
Crypto Tax Rate
When you hear crypto tax rate, it simply refers to the percentage at which your cryptocurrency transactions or earnings are taxed. This can vary based on how you acquired the crypto and how long you’ve held it. Your cryptocurrency could be taxed as long-term capital gains, short-term capital gains, or regular income, depending on your situation.
#1. Ordinary Income Tax
If you earn cryptocurrency, whether through work, mining, staking, or airdrops, it’s considered regular income and taxed accordingly. The crypto tax rate can vary from 10% to 37%, depending on your income. When you get rid of cryptocurrency, it’s taxed as a capital gain. This applies when you sell it, trade it for other cryptocurrencies, or use it for purchases.
#2. Long-Term Capital Gains Tax
If you’ve held your cryptocurrency for over a year, selling or disposing of it will incur long-term capital gains tax, which ranges from 0% to 20%, based on your income.
#3. Short-Term Capital Gains Tax
Selling or disposing of your cryptocurrency within a year is taxed as short-term capital gains. This is treated like regular income, with 10% to 37% tax rates, depending on your income level.
Conclusion
Handling crypto taxes might seem tricky at first, but it’s actually quite manageable if you stay organized. Whether you’re buying, selling, or earning crypto through mining, it’s important to keep track of your transactions. Additionally, tools like CoinLedger, CoinTracker, and Koinly can really help by making it easier to organize your data and get your taxes right.
So, if you start early and keep your records in order, tax season will be a lot less stressful. With the right tools, you’ll be ready to file your taxes smoothly without any unnecessary hassle.
How to Calculate Crypto Taxes?
In the United States, cryptocurrency tax rates vary depending on your income and the length of time you retain the assets. Short-term gains are taxed at regular income rates ranging from 10% to 37%, whereas long-term gains are taxed at preferential rates ranging from 0% to 20%, based on income. Income from cryptocurrency is taxed at conventional income tax rates.
How Much Tax Will I Pay on Crypto?
Your entire annual income determines the exact amount of Capital Gains Tax you owe from cryptocurrency trading. This figure affects how much your cryptocurrency profits are taxed at 10% or 20%.
How to Get a Tax Report for Crypto?
Fill out Form 8949 to document your cryptocurrency transactions. Transfer the totals from Form 8949 to Schedule D on your tax return. If you are self-employed, use Schedule C to report any ordinary income from bitcoin. Otherwise, use Schedule 1 of Form 1040.
Does the IRS Accept Bitcoin?
The IRS will accept it as evidence of fair market value. The value is determined by a cryptocurrency or blockchain explorer that scans global cryptocurrency indexes and estimates the cryptocurrency’s value at a specific date and time.
References
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