Question 1

What is the best crypto tax software?

Accepted Answer

Crypto Tax Calculator is the official tax partner of Coinbase and Metamask and has a 4.8/5 rating on TrustPilot from hundreds of users. It focuses on providing highly accurate tax reports no matter how complicated your transactions are. Crypto Tax Calculator integrates seamlessly with over a thousand exchanges, wallets, blockchains and DeFi protocols. After you import your accounts or transactions it automatically calculates gains, losses, cost-basis, and can export data directly into TurboTax or IRS-ready forms like Form 8949, Schedule D. The software supports more than 20+ jurisdictions around the world, is updated regularly to stay aligned with changing tax laws, and has a number of tax professionals and lawyers on staff. The customer support team is highly active and willing to guide you through the process step-by-step as well as takes feature requests for new integrations, blockchains or exchanges.

Question 2

How is crypto tax calculated in the United States?

Accepted Answer

You can be liable for both capital gains and income tax depending on the type of cryptocurrency transaction, and your individual circumstances. For example, you might need to pay capital gains on profits from buying and selling cryptocurrency, or pay income tax on interest earned when holding crypto.

Question 3

Do you have to pay taxes on Bitcoin?

Accepted Answer

Yes, you must pay taxes on Bitcoin and other cryptocurrencies in the US. The IRS treats cryptocurrencies as property, which means they are subject to capital gains tax when sold. You may also have to pay income tax on Bitcoin if you received it as payment for work or as income from activities like staking mining.

Question 4

How is bitcoin taxed by the IRS?

Accepted Answer

The IRS treats bitcoin as property, not currency. This means the IRS taxes Bitcoin as either capital gains or income, depending on the specific transaction involved. Capital gains tax events occur when you sell, trade, or exchange bitcoin for another asset. If you held your Bitcoin for more than a year before selling it, you will pay long-term capital gains tax rates. If you had it for less than 12 months before selling, your capital gains are taxed at your income tax rate. Income tax events occur when you receive Bitcoin as payment for work you have done or as a reward from activities like DeFi or Bitcoin mining.

Question 5

How to report crypto on taxes?

Accepted Answer

To report crypto on your US taxes, first determine if your crypto-related activities produced capital gains or income (such as mining or staking rewards). For capital gains or losses, detail each transaction on Form 8949, then summarize on Schedule D. Keep records of purchase dates, sale dates, prices, and fees. Some crypto exchanges will let you download this information in a CSV file. To make this process easier, consider using crypto tax software such as Crypto Tax Calculator. This software analyses transactions, calculates capital gains, and produces an IRS-compliant report ready for TurboTax and Form 8949. For income, report the fair market value of the crypto you received as income on Schedule 1 (Form 1040), typically on line 8z. Make sure you follow IRS guidance, stay updated on rules, and file by the annual deadline. If unsure, consult a qualified tax professional for guidance.

Question 6

How much is crypto taxed?

Accepted Answer

Crypto is taxed according to either capital gains tax or income tax brackets. The specific tax bracket will depend on your holding period, income level, and the type of transaction. If you hold crypto for more than one year, you pay long-term capital gains rates (0%, 15%, or 20%), based on your taxable income. If held for less than a year, gains are taxed as ordinary income at your income tax rate. Income from mining, staking, or receiving crypto as payment is treated as ordinary income.

Question 7

Do you have to pay taxes on crypto?

Accepted Answer

Yes. In the US, the IRS treats cryptocurrency as property. You owe taxes on crypto whenever you sell, trade, or otherwise dispose of crypto at a gain. For income earned through mining, staking, airdrops, or receiving crypto as payment, you pay ordinary income tax. For capital gains, use Form 8949 and Schedule D to report profits or losses. Keep detailed records of transactions, dates, and amounts. Consider using crypto tax software, such as Crypto Tax Calculator, to streamline your calculations. If unsure, consult a qualified tax professional for guidance and ensure you comply with all IRS regulations.

Question 8

What is the best app to track crypto taxes?

Accepted Answer

No single "best" app suits everyone for tracking taxes, as it depends largely on how you trade, what platforms you use, and whether you want a free tool or paid software. Look for an app that integrates with your preferred exchanges and prepares IRS-ready forms like Form 8949 and Schedule D. Ideally, your chosen app should auto-import transactions, detect potential deductions, and keep records in line with IRS guidance. Consider a web app like Crypto Tax Calculator, which helps simplify complex calculations, track cost basis, and ensure compliance with US tax laws.

Question 9

I lost money trading cryptocurrency. Do I still pay tax?

Accepted Answer

The way cryptocurrencies are taxed in the United States means that investors might still need to pay tax, regardless of if they made an overall profit or loss. Depending on your circumstances, taxes are usually realized at the time of the transaction, and not on the overall position at the end of the financial year.

Question 10

How do I calculate tax on crypto-to-crypto transactions?

Accepted Answer

In the United States, you are required to record the value of the cryptocurrency in your local currency at the time of the transaction. This can be extremely time-consuming to do by hand, since most exchange records do not have a reference price point, and records between exchanges are not easily compatible. Consider using tax software like Crypto Tax Calculator, which handles these sorts of calculations for you.

Question 11

What is the best tax method for crypto?

Accepted Answer

The "best" tax method for crypto is the one that most accurately reflects your circumstances and trading behavior in the eyes of the IRS. The IRS allows methods like First-In, First-Out (FIFO), Last-In, First-Out (LIFO), or Specific Identification. Whichever method you choose, you will need to support it with accurate transaction logs and evidence. You should also be careful of switching inventory methods between different tax years. This could lead to an error in which the same transaction is counted twice across two separate tax years. Crypto Tax Calculator is tax software that offers several tax methods and lets you "lock" in a specific method for a given tax year to prevent transactions from being counted twice.

Question 12

How can Crypto Tax Calculator help with crypto taxes?

Accepted Answer

You just need to import your transaction history and Crypto Tax Calculator will help you categorize your transactions and calculate realized profit and income. You can then generate the appropriate reports to send to your accountant and keep detailed records handy for audit purposes.

Question 13

Can't I just get my accountant to do this for me?

Accepted Answer

We always recommend you work with your accountant to review your records. If you would like your accountant to help reconcile transactions, you can invite them to the product and collaborate within the Crypto Tax Calculator web app. We also have a complete accountant suite aimed at accountants.

Question 14

Does Crypto Tax Calculator handle non-exchange activity?

Accepted Answer

Crypto Tax Calculator handles all non-exchange activity, such as onchain transactions like Airdrops, Staking, Mining, ICOs, and other DeFi activity. No matter what activity you have done in crypto, we have you covered with our easy to use categorization feature, similar to Expensify.

Question 15

Do I have to pay for historical tax reports?

Accepted Answer

Our subscription pricing is per year not tax year, so with an annual subscription you can calculate your crypto taxes as far back as 2013. The process is the same, just upload your transaction history from these years and we can handle the rest.

Question 16

How does payment work?

Accepted Answer

Crypto Tax Calculator has an annual subscription which covers all previous tax years. If you need to amend your tax return for previous years you will be covered under the one payment. We also offer a 30 day 100% money back guarantee, where if you contact our support team you can collect a full refund.

Question 17

Can I use my own accountant?

Accepted Answer

Yes, Crypto Tax Calculator is designed to generate accountant-friendly tax reports. You simply import all your transaction history and export your report. This means you can get your books up to date yourself, allowing you to save significant time, and reduce the bill charged by your accountant. You can discuss tax scenarios with your accountant, and have them review the report.

Question 18

What if my exchange is not on the list of supported exchanges?

Accepted Answer

Crypto Tax Calculator covers thousands of exchanges, wallets, and blockchains, and DeFi apps, but if you do not see your exchange on the supported list we are more than happy to work with you to get it supported. Just reach out to info@cryptotaxcalculator.io or via the in-app chat support feature and we will get you sorted.

Question 19

Does Crypto Tax Calculator support NFT transactions?

Accepted Answer

We do! Crypto Tax Calculator integrates with many NFT marketplaces and offers categorization options for any NFT-related activity (minting, buying, selling, trading).

Question 20

How does the free trial work?

Accepted Answer

Crypto Tax Calculator is free to use immediately upon signup, allowing you to import your transactions and take advantage of our smart suggestion and auto-categorization engine, portfolio tracking, DeFi and NFT support. For access to reports, the tax loss harvest tool or chat and priority support, you will need to upgrade to the appropriate paid plan.

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