3 important factors to consider when choosing a crypto tax calculation software
In the wake of the recent IRS tax guidance on cryptocurrencies, many people are scrambling to find a crypto tax calculation software that’s right for them and their cryptocurrency tax needs.
There are several factors that need to be considered before deciding which one to buy; this article will walk you through them so that you’ll know what to look out for when selecting your software provider.
1) Simple – should be able to calculate cryptocurrency gains or losses
The first thing to think about when deciding on which program to go with is the type of tax you are filing. There are three main types of cryptocurrency taxes: capital gains, income, and sales. The one that you need depends on your situation.
The second thing is whether or not the company offers free trial periods. This is important because it gives you time to test it out and decide if it’s right for you before paying any money.
The third consideration should be how often the company updates their system with changes in law or regulations that might affect your taxes. If they don’t update their system then they might not be accounting for any changes made by the government, which could cause an issue down the line. These are just some things to keep in mind when looking for a good crypto tax calculator!
2) Track Capital Gains
One of the most important things to keep in mind while choosing a crypto tax calculation software is if it automatically tracks your capital gains. If it doesn’t, you’ll need to do that manually and include it on your taxes. You also want something that will calculate depreciation and allow you to handle self-employment taxes, which could save you money depending on what type of work you’re doing. Some systems will also allow you to make estimates for future income or losses so you don’t have any surprises at the end of the year. One other factor is determining whether you are filing as an individual or as a company. There are pros and cons to both filing methods, so it’s best to talk with someone who knows more about the system you choose before making a decision.
3) Save/export data into file format (.csv)
Crypto taxes can be quite confusing. When deciding which type of program you would like to use, there are three things that you should keep in mind. First, what is the deadline for filing? Different programs have different deadlines, so it’s best to find out as soon as possible. Second, how comfortable are you with entering your information? Depending on the program you choose, some may require that you enter all of your financial information manually while others will automatically fill it in from various sources (e.g. Coinbase). Finally, do you need an audit trail? If so, then an automated form may not be the best option because they typically don’t provide this service. It might be worth paying more money for another company that offers this. One thing to remember is that the complexity of a crypto tax calculation depends on what kind of assets are being invested in. If someone were trading stocks or securities and had over one million dollars’ worth, then the process could take up to six hours or more than six hours. It really depends on how many assets you trade and if it changes your income bracket considerably. In any case, we hope these three things will help you make a more informed decision!