In 2018, one of the hottest topics for the bitcoin community has been taxation. In light of the exuberant rise in the value of bitcoin and other digital currencies in 2017, tax authorities around the world are now keen on catching wealthy bitcoin investors who have not been appropriately reporting their digital earnings on their tax returns.
To help you to identify how much you owe the taxman in capital gains tax on your bitcoin investment income, you will find the three best bitcoin tax calculators in this article.
One of the most popular and easy-to-use bitcoin tax calculation solutions is BitcoinTaxes. The web-based calculator, which was launched in 2014, allows you to generate a tax report by first importing all your trades, any mining income, donations, and other bitcoin income using a CSV file.
Next, the application will calculate your capital gains or losses for the tax year. Furthermore, the software allows you to choose which accounting method you prefer to use. You can choose from LIFO, FIFO, average costing, and compare like-kind treatment as there is currently no official accounting standard that needs to be used when computing digital currency income for tax purposes.
Finally, BitcoinTaxes will provide you with a capital gains or losses report for your bitcoin investments, an income report for mining income and any other bitcoin income you have made during the year, a donation report (if you have made any bitcoin donations), and a closing report that will provide you with your total net profit or loss as well as your cost basis going into the next tax year.
LibraTax is another popular bitcoin taxation solution among digital currency investors. The San Franciso-based startup, which was launched in 2014, offers both individuals as well as businesses dealing in digital currency a web-based platform that enables them to “track crypto activity and establishes cost basis to calculate capital gains and losses and report taxable events”.
LibraTax allows users to keep track of all their cryptocurrency transactions by automatically retrieving the user’s historical sales and purchases of bitcoin from the blockchain and reconciles them with the real-time value of the digital currency. The software also allows users to date back transaction for previous years for those who desire to make amendments in filed tax returns to keep the taxman happy.
The only drawback of LibraTax is that its software is only relevant to those who file their taxes in the U.S.
Probably the best solution to calculate your digital currency investment income, especially if you have a large diversified portfolio, is CoinTracking. The web-based platform allows you to link your bitcoin exchange accounts to the application using CSVs or APIs so that CoinTracking can import your trading history into its application. The software then shows you exactly how much profit or loss you have generated by providing you with a breakdown of your gains and losses.
CoinTracking supports over 5,000 digital currencies and supports 25 exchanges, which is very valuable for active traders who use several exchanges and hold a broad portfolio of digital assets. Armed with this information, CoinTracking then generates a tax report for you relevant to your jurisdiction.
Regardless of which bitcoin tax calculator you choose, the time is ticking down to make your choices and get those returns filed. After you have completed that task, treat yourself to some great investment tips for this tax year. How? That is easy! Subscribe to the Bitcoin Market Journal newsletter, of course!