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.
This is the final installment in our crypto tax software selection series. In the first article we addressed making sure that your service can import all of your data properly, while in the second one we outlined the importance of confirming that the service you use lets you tweak your uploaded data to ensure a high degree of accuracy.
Now, we cover two important final steps: making sure that the crypto accounting software is both compatible with your broader tax filing software and is affordable.
Does It Blend?
Compatibility with popular tax and accounting software is a very important factor when it comes to choosing your crypto tax software. Many cryptocurrency tax software platforms, however, are limited when it comes to working with these applications. It is therefore important to find out whether the crypto accounting software works with TurboTax and the like, or with the software that CPAs use.
Cointelli provides compatibility with both of the above, and more. It generates your tax reports in a form that is ready for direct upload to TurboTax and TaxAct, and can also send your tax report straight to your accountant via email with a simple click of the ‘Send to Accountant’ button.
You can rest assured that Cointelli knows what it’s doing when it comes to carrying reports over to other programs too. Cointelli ensures compatibility with popular accounting software applications, with many accounting professionals having participated in its design and development. With Cointelli, your accountant can therefore swiftly generate tax reports that work with their accounting software.
Is The Price Right?
Since the crypto accounting software market is still relatively new, the price tags for these services often range from $50 to $200, and more for other packages. Annual subscription costs for this kind of software in most cases exceed $100 when the number of transactions goes over 1,000 per year, as pricing is often based on the number of transactions you run through the software. For example, if you traded 20 times every week throughout 2021, it would add up to more than 1,000 transactions, and you may pay more than twice the basic plan.
With Cointelli, you can process up to 100,000 transactions and still only pay $49 a year (plus tax). This is, in practice, the lowest price in the industry. While other competitors may appear to offer lower base fees, these prices often come with very low transaction limits. These limits will often force you into a new tier that is more expensive than Cointelli’s one-size-fits-all deal. Have more than 100,000 transactions? Just reach out and let us know.
This brings us to the end of our discussion of the most important things to keep in mind when choosing a crypto tax solution. Let’s now briefly address what may happen if you don’t report your crypto assets properly.
Cryptocurrency exchanges already report their users’ assets and transactions to the IRS through forms like the 1099-K and the 1099-MISC. Starting in 2023, they’ll also send out 1099-Bs to report capital gains. So the IRS already has an idea of who owes crypto taxes and how much they owe. What’s more, they will only come to be more informed as time goes on.
On top of that, the IRS has been asking taxpayers since the 2019 tax year right at the top of their Form 1040s whether they’ve engaged in cryptocurrency trading. Answer this question incorrectly or leave out parts of your overall income, and you may be subject to criminal and financial penalties.
So which software can be trusted to satisfy all of the criteria we’ve established over the last three articles and get you through tax season as painlessly as possible? After reading this series, we hope you’ve decided on Cointelli!
You have our word. When it comes to getting your taxes done quickly and accurately, you can count on Cointelli.
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.