Best Crypto Tax Tools: Why Do You Need Them?

The issue of taxes is certainly interesting for many crypto enthusiasts. However, a well-known saying of Benjamin Franklin applies here: There are only two things certain in life – taxes and death. 

This is why many crypto investors are dealing with this problem. In this respect, today, there are many crypto tax tools that make life much easier. We’ve compared numerous tools and are about to present the best of them. Let’s get started!

Who Needs Crypto Tax Tools?

Crypto tax tools are suitable for those who have to pay taxes on cryptocurrencies. Of course, the first question is whether you are taxable or not. At this point we will focus on private investors – these are currently the main group of taxpayers in the cryptocurrency sector.

Taxes are primarily incurred when selling cryptocurrencies. For example, If cryptocurrencies such as Bitcoin or Ethereum were bought and sold cheaply during a Corona crisis this year, taxes will be payable.

Above all, traders who make numerous trades with cryptocurrencies are also required to pay taxes. For these groups, crypto control tools are therefore suitable to make their lives easier. This software enables private investors to keep an eye on their data at all times and to predict a tax burden at the end of the year.

Regardless of whether your purchases or sales of cryptocurrencies lead to losses or profits – these transactions should be indicated in a tax return. There are a lot of people who have given little thought to crypto and taxes and ultimately paid a lot more than they should have.

Especially if you convert a substantial sum into fiat money, sooner or later a tax office will show up. We therefore strongly recommend you to act within the law and pay a necessary amount of taxes. With the help of crypto tax tools, this is also much easier than if you would fill in your tax return yourself.

What Are Crypto Tax Tools?

As already mentioned, crypto control tools are intended to facilitate the work of users. Similar to regular control programs, they help users by relieving them of a work process. For example, crypto tax tools help with tracking purchases and sales.

This function is particularly useful for traders. If you decide to fill in your tax return yourself, you must keep a record of your trades at all times. Without technical support, this is an extremely annoying process. Especially if you trade on several exchanges at the same time.

With the help of crypto control tools, you can free yourself from this additional amount of work. This software makes recording crypto trades much easier. The majority of the programs can be connected directly to crypto exchanges and wallets and so that you can keep an eye on them.

In addition, you can also use these crypto control tools to transmit data directly to general control software. So, you have outsourced a significant part of your work to a program that automatically imports and manages your data from crypto exchanges via API or CSV. Nowadays, most exchanges provide extensive data about your trades that these programs can use.

Which Tools Are the Most Popular?

In recent years, more and more tax tools have entered the market. That is, a lot of users wonder which tools are the best ones. This includes, for example, Coin Tracking, CryptoTax, Blockpit, and HeyTax.

These providers have hundreds of thousands of users and offer various useful functions. With the help of these tools, you can keep track of your profits and losses at any time. In addition, these providers also offer numerous other functions. 

How-to videos in particular help when starting and are particularly suitable for newbies. For example, someone who has never filled in a tax return no longer needs to worry about his/her cryptocurrencies. The providers listed above work mainly on a subscription basis. This means that you transfer a certain sum to developers on a monthly basis.

In addition, the majority of providers offer various subscription options. With free versions, for example, you can only enter a certain number of transactions, and tax reports are also not fully available. Therefore, in most cases, you will have to use paid subscriptions.

However, this also has other advantages. In this way, a user is provided with an unlimited number of transactions. Expensive subscriptions are primarily recommended for professional traders. 

Have you ever used crypto tax tools? Just share your experience in the comments!

Leave a Reply

Your email address will not be published.