CoinTracking is the most complete crypto tax tool in the market with 1.5 million users, helping US investors comply with all the changing requirements.
Why CoinTracking excels in crypto taxation
CoinTracking has been on the market since 2013, one of the first tax software specifically designed to help crypto investors across countries, including the US.
Since then, the crypto market has evolved a lot, but CoinTracking has consistently been the most complete tax software, given its existence since the inception of the crypto market!
US investors will find all the features they need to do their crypto taxes with CoinTracking, from importing crypto trades from hundreds of exchanges, blockchains and wallets, to generating the necessary tax reports.
But it doesn’t end there! With advanced reporting capabilities, investors can easily track their crypto activities comprehensively, from portfolio management to tax obligations.
For investors pressed for time or dealing with complex trading scenarios, CoinTracking’s Full-Service provides a hassle-free solution where a team of experts does their taxes for them.
The US crypto tax deadline is coming on April 15, and this is the time for investors to take care of their crypto taxes. But why?
Why should investors be concerned about crypto taxes?
The IRS taxes cryptocurrencies through various mechanisms, making its tax code one of the most comprehensive and complex frameworks for digital assets. As a result, investors must comply with these guidelines and fulfill their crypto tax obligations each tax season.
In 2014, the IRS issued its first guideline outlining how cryptocurrencies are treated from a tax point of view in the United States, categorizing them as commodities. This classification has significant implications for individuals engaging in crypto-related activities, from trading to
earning income.
Since then, the IRS has issued new guidelines and revised the tax code to adapt to emerging trends in the market, such as NFTs, staking, and DeFi. These updates aim to address the evolving landscape of digital assets while clarifying the most common questions raised by investors over the years.
Despite these efforts to clarify regulations, the US crypto tax code remains complex for investors due to the intricacies and “gray areas” inherent in specific crypto transactions, ranging from liquidity pools to Web3 protocols.
However, US citizens and investors have the responsibility to report their crypto taxes correctly to avoid fines and penalties. The most straightforward approach to compliance is to work with a
tax professional, ensuring correct filing through a hands-free process. Even in less complex tax situations, investors still need crypto tax software to track their trades, determine gains/losses
and income, and generate the right tax forms for digital assets.
However, to leverage these tools effectively, investors need to know what to track and what transactions are taxable events.
The US taxes various crypto transactions
The IRS applies capital gains tax rates to trading cryptocurrencies, with rates ranging from 0% to 37%, depending on the holding period of the initially held coin.
Investors trading any cryptocurrency for other cryptocurrencies, NFTs, or FIAT currency will be subject to capital gains tax.
If investors hold their initially purchased cryptocurrency for over 12 months before selling it for another asset or FIAT currency, they face a long-term capital gains tax rate, ranging from 0% to 20%, depending on personal factors (e.g., filing status).
On the other hand, if investors hold their cryptocurrencies for less than 12 months before selling them for FIAT, NFTs, or other cryptocurrencies, they are taxed at a short-term capital gains tax rate, ranging from 10% to 37%.
Trading NFTs is also subject to capital gains tax, following the same methodology. The same principle applies to trading DeFi tokens, or any tokens traded on decentralized exchanges, regardless of whether the trading occurs on centralized or decentralized platforms.
If investors engage in leveraged trading, such as Futures or Margin trading, they must also calculate their gains and losses, similar to spot trading.
On the income side, crypto investors can earn income through various transaction types, including staking rewards, crypto interest (in the form of new tokens), receiving new coins from hard forks, airdrops, receiving salaries in cryptocurrencies, receiving payments as freelancers/contractors in digital assets, selling NFTs or other digital art as creators, and more.
When investors receive crypto income, they must determine the Fair Market Value (in USD) of every batch of interest, rewards, or proceeds they receive at the time of receipt. Sometimes, due to the unique nature of certain coins received, such as through airdrops or hard forks, tracking the proper Fair Market Value of each batch of new coins can be challenging. However, once this data is available, investors need to record it.
In addition to keeping proper records of all crypto gains and income, investors must file specific forms to report their crypto taxes.
Investors trading cryptocurrencies/NFTs and realizing capital gains/losses must report them on Form 1040, Form 8949, and Schedule D. To file these forms, investors need to keep track of certain information on a frequent basis, including:
- Dates of acquisition and sale of digital assets
- Cost basis
- Sales proceeds
- Gains/losses on each crypto transaction
- Split your gains/losses into long-term and short-term categories, etc
Investors earning any type of crypto income need to report the Fair Market Value (in USD) on their US Individual Income Tax Return (Form 1040). Investors need to add all their crypto income into their income from other activities (e.g., salaries). The tax rate will depend on the total income bracket that investors fall under and other personal factors (e.g., filing status).
To become fully compliant in the US, given all the requirements and challenges of maintaining proper records, investors need to resort to tools that streamline this process. Crypto tax software is the answer to navigating this landscape.
Crypto tax software empowers US investors to become compliant
Crypto tax tools like CoinTracking were specifically designed to meet the needs of US investors and simplify the process of filing their crypto taxes.
When evaluating crypto tax software, investors should pay attention to several factors, including:
1. Number of importers
This is a crucial feature of crypto tax software. Busy investors often trade on various crypto exchanges, decentralized protocols, Web3 gaming platforms, and blockchain networks. A top-tier crypto tax tool should support these avenues and enable investors to track their trades, gains, and income from different activities and sources.
CoinTracking supports over 300 importers, including the most popular exchanges, emerging blockchain networks, and wallets, making it the most comprehensive tax software available.
2. Supported transactions
Crypto tax software must allow investors to import various crypto trades beyond simple spot transactions. CoinTracking covers most transactions in crypto, including DeFi income, staking, NFTs, play-to-earn gaming income, and more.
3. Accounting methods
In the US, the IRS accepts specific accounting methods for calculating gains. Investors must use one of these methods consistently across tax years to accurately report their crypto taxes.
CoinTracking supports all the popular accounting methods approved in the US, including FIFO, LIFO, HIFO, LOFO, OPTI, and others.
4. Tax reports and filling integrations
Investors dealing with cryptocurrencies must address the “crypto question” on tax returns and file specific tax forms to report their gains/losses and income.
US investors should select crypto tax software that prefills all the necessary information in the forms, such as Form 8949.
CoinTracking supports the generation of the right crypto tax forms while integrating with popular filing platforms like TurboTax and Drake Software.
5. Advanced reporting features
Crypto tax software should offer more than just determining gains and generating tax reports.
CoinTracking can, for example, show investors which coins in their portfolio may be eligible for a long-term capital gains tax rate (a lower tax rate) based on the holding period of their coins. In the US, investors can take advantage of this benefit!
6. Value for money
Many crypto tax tools do not offer a free plan to investors with few trades. However, CoinTracking supports crypto enthusiasts with as few as ten trades and investors with thousands of transactions through convenient pricing plans. Premium plans (up to 3,500 trades) start at €9.99/month with CoinTracking.
7. Security
Security is paramount for a professional tax tool to truly help crypto investors.
Investors should pay attention to the permissions granted to these tax tools and how they handle their data.
For instance, CoinTracking recently received its ISO/IEC 27001 certification, reinforcing its commitment to data protection and security.
“In the US, crypto taxes can quickly become complex! We’ve addressed all the main challenges that investors face and designed a tool that is cost-effective, intuitive, and robust for the 2024 crypto tax season,” remarked Dario Kachel, founder and CEO of CoinTracking.
Full-Service in the US: The hands-free solution for US crypto taxes
CoinTracking’s crypto tax tool, combined with the assistance of a crypto tax professional, offers a foolproof method for navigating this crypto tax season with ease.
CoinTracking Full-Service has helped thousands of US investors complete their crypto taxes through a completely hands-free process each tax season. CoinTracking experts and partner crypto tax firms review, validate, and adjust their transactions to ensure accurate tax reporting.
Investors can choose from a wide range of services under Full-Service, ranging from an initial onboarding call to a full account review. For those seeking clarification and quick fixes for their crypto tracking, premium support packages or 30-minute calls are available.
Investors requiring additional support in managing the volume and complexity of their trades can subscribe to more comprehensive packages, such as the Express Account Service or Account Reviews and Services. Additionally, our crypto tax partner in the US can handle investors’ complete crypto tax returns through the Crypto & US Tax Return Service.
About CoinTracking
CoinTracking is the leading cryptocurrency tax software and portfolio tracker, supporting over 1.5 million customers worldwide.
With CoinTracking, investors can import their crypto transactions, track their crypto gains/losses, generate tax reports, and much more.
Press contact:
Agnieszka Mojsiej
Marketing Manager, CoinTracking
[email protected]
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- Source: https://www.coinbureau.com/press-release/cointracking-top-choice-for-us-taxes/
