With roughly 16% of the adult population investing in cryptocurrencies, and the US government giving the IRS another $80 billion to track crypto tax evaders, US investors are having to pay more attention to reporting taxes on crypto. However, doing your crypto taxes properly involves accurately reporting complex transactions from across a large number of platforms. To get it right without greatly “taxing” yourself, you therefore need the right software.
Following our previous article about importing your data from across crypto platforms, we now cover another very important aspect: making sure that your crypto tax software can review imported data and let you correct any errors.
Fine Tuning the Numbers
Always make sure that your cryptocurrency tax software reviews what it is outputting before it generates your tax report. Not all transactions are taxed in the same way; some transactions may count as capital gains or ordinary income (taxed at different rates), and other transactions may be considered tax-exempt. However, these distinctions often aren’t made in the raw imported data. If the data is not correctly categorized, you risk being over-taxed. Thus, your software should allow you to look through the transaction data and correct the mis-categorized transactions. In short, the review function is a must-have in any tax software looking to deliver optimal tax calculations.
Identifying internal transfers is another of the most important steps in accurately calculating your crypto taxes. If you don't filter them out properly, you will not be able to calculate your taxes accurately. Cointelli allows for these internal transfers to be reviewed either manually or automatically.
Cointelli: Manual vs. Automatic Review
Cointelli allows you to review your data in either Manual or Auto Mode. These features are not offered by competing products, which only notify you when there are unresolved issues with your data. While manually inputting specific transaction types and values would normally be painstaking work, Cointelli makes it easy by means of a simple and user-friendly process.
Cointelli’s Auto Mode is no slouch when it comes to getting the job done, either. Those still relatively new to the crypto trading experience may struggle with tweaking their data in Manual Mode, which is why Auto Mode is there to make the process painless. Just click one button, and watch Auto Mode fix up any gaps or inconsistencies just like that.
One Last Step…
We have now covered the need to ensure that your crypto tax software both imports your data properly from all your exchanges and wallets, and that it gives you the power to make edits after compiling your data.
There are still a couple more very important factors you need to confirm before you choose your crypto tax software though. We’ll catch you in the next installment!
Cointelli is a crypto tax reporting company founded by Mark Kang, a certified tax professional whose long experience serving his community as a CPA motivated him to develop user-friendly tax software. Cointelli automatically detects and corrects errors during the tax report generation process and is compatible with TurboTax as well as a broad range of crypto exchanges and wallets. In these ways and more, Cointelli brings ease to the tax reporting process.
Check out Cointelli to learn more.