Cryptocurrency has become very popular and is currently one of the hottest investment options worldwide. It has grown to the extent that many governments around the globe have started establishing cryptocurrency taxes that traders and investors must pay.
For instance, the U.S Internal Revenue Service (IRS) stated in 2014 that cryptocurrencies are taxed as property, meaning that every trade or sale of cryptocurrency is a taxable event.
However, one of the most stressful aspects of being a cryptocurrency trader is trying to keep track of which coins you bought and sold to help file your crypto tax effectively.
This is where crypto tax software comes into the picture. This software allows you to keep track of your transactions in real-time and generate free tax forms that show how much you will pay in taxes.
Interestingly, there are several such software in the market, and TaxBit is one of the top-rated. We'll discuss everything about the TaxBit crypto tax software and briefly highlight its worthy competitors to help you compare your options.
What is TaxBit?
TaxBit is a cryptocurrency tax software that allows crypto investors and holders to easily determine profits, losses, and tax obligations, enabling them to produce tax forms compatible with the IRS. The company was established in 2018 and has its corporate headquarters in Salt Lake City, Utah.
TaxBit was created by top blockchain CPAs, programmers, and cryptocurrency tax attorneys. Hence, it runs data through carefully analyzed tax codes to ensure that tax reports comply with current regulations.
Its software connects to cryptocurrency exchanges and offers businesses and private users customized access. Users can automatically import trades from more than 500 cryptocurrency exchanges with the help of TaxBit.
However, TaxBit's goal is to make it easier for people to adopt cryptocurrencies by automating the regulatory barrier of tax compliance. Users can quickly and easily generate all their necessary crypto tax forms using TaxBit's self-service platform.
Furthermore, the fact that TaxBit has earned the trust of regulatory bodies says a lot about it. These bodies often leverage the software to gain insight into this developing area of difficulty in the cryptosphere.
How Does TaxBit Work?
As already established, the software provides an automated way to compute and report taxes. It manages the synchronization of transaction data, computes gains and losses, and claims capital losses where applicable.
To accomplish this, TaxBit leverages an API integration system to link your exchanges, automatically retrieve your transaction history, and then cycle those data through its tax engine.
More so, TaxBit provides its users with real-time portfolio statistics as they trade instead of just producing a tax form at year-end. Again, TaxBit supports about 4,200 digital assets/commodities/equities, a wide range of crypto exchanges/wallets, and all fiat currencies. These enable users to connect their exchanges/wallets to the TaxBit platform through APIs.
Users can also use TaxBit's automatic CSV conversion tool if their favourite exchanges are not supported. The conversion tool manually imports transactions from your exchange into the TaxBit software.
Remember that the TaxBit software solely serves crypto traders and investors in the United States and employs IRS tax codes to guide its tax reporting operations. However, the company is interested in expanding its services to nations like the UK, Canada, and Australia.
How to Use TaxBit
To create a TaxBit account, go through their website and look for the "Sign up" button. It is in the upper-right section of the page.
When you arrive at the sign-up page, you will find a form requesting basic details about you. This will include your postal code and estimated income.
This first step helps to determine the tax rates to apply to your capital gains from the previous tax year. Afterward, connect all your exchange accounts to the TaxBit platform.
The API will automatically import all transactions and calculate the profits and losses. Once it compiles and syncs all your data, you can load it into the TaxBit interface. You'll get a broad view of your crypto tax details, including taxable gains. You can also get your cryptocurrency tax forms through your account.
TaxBit Features
TaxBit is one of the market's most reliable cryptocurrency tax software solutions. This is due to their good features and service delivery. Here are some of its features:
Free Tax Forms
TaxBit allows users to generate free tax forms using its software. You can rely on it to generate free current-year 1099-B and 8949 forms. This applies to all TaxBit Network-supported companies.
But, you must subscribe to receive the free tax forms for all platforms and historical tax forms.
Tax Optimizer
The software also provides tax-loss harvesting and tax optimization features. These help you reduce your liabilities when your assets underperform. Using it also makes calculating capital gains and applicable crypto tax rates easier.
Also, note that you must subscribe to the Plus+ or the Pro plan to use this feature.
DeFi and NFT tax engine
TaxBit also offers tax information on DeFi and NFT collections. You can access this feature while on any plan. But if you want extra access to the NFT Suite feature, you'll need to upgrade your TaxBit plan to Plus+ or Pro. The Suite plan features other NFT information besides tax information.
Unlimited Transactions
TaxBit used to offer limited transactions for all its plans. The Basic plan had a 250 transaction limit, the Plus plan had a 2500 transaction limit, and the Pro plan had 25,000.
But, with the launch of the TaxBit Network, the company eliminated the limits. You will have no transaction limits, regardless of your TaxBit plan.
User-Friendliness
TaxBit is simple to learn and use, thanks to its intuitive and clean interface. The software makes tax reporting a walk in the park for its customers. This includes the signup process, connecting exchanges, and the generation of tax forms.
Also, since TaxBit is an automated system, all you have to do is connect its API to your exchanges. After that, the software scans and retrieves all the transaction details. The system analyzes the data and generates detailed reports. The reports are often ready for filing with the IRS, so you can choose to download them.
Mobile App Availability
There is no TaxBit mobile app, nor is there any news on future developments of a mobile app.
But, TaxBit is available via the internet on mobile and other electronic devices. While it works best with desktop devices, it is still compatible with mobile devices.
Customer Support Team
TaxBit has a great customer support system. Its website provides an information base. Here, you can get quick answers to questions that do not need direct customer support. You'll find information on how to connect the software to APIs on crypto exchanges. You'll also learn how to manage TaxBit accounts and ask for technical support.
One major drawback is that TaxBit does not provide direct phone support. But, all other communications and support channels are well managed.
TaxBit Integrations and Exchange/Coins Support
TaxBit has extensive exchange support. It integrates with almost every exchange in the world, well above 500.
Some of the most popular supported exchanges include
The majority of the popular exchanges are TaxBit-compatible through direct API support. But exchanges that do not provide this functionality can still become compatible. Such less-established exchanges will use manual CSV file imports.
TaxBit also offers automatic CSV import for dozens of exchanges. This makes it easier to deal with these types of files.
Furthermore, TaxBit has native support for over 2,500 different cryptocurrencies. It is also building a tool for tracking activities in the DeFi ecosystem. Again, it works with TurboTax and TaxAct, allowing you to upload tax forms to these programs.
TaxBit Security
TaxBit only collects read-only API keys. This means it can only view your transaction details but cannot access the digital assets. Hence, it is safe to use TaxBit.
If it suffers a hack attack, the hacker would only be able to see your transaction history. He will not be able to get the coins therein. It is also worth noting that the platform does not store users' personal information. Its servers do not keep social security numbers or tax identification numbers.
TaxBit also uses AWS RDS database servers. All data is encrypted in transit and at rest with AES 256. It is also SOC 2 compliant.
TaxBit Team
The people behind TaxBit are both learned and experienced. Two brothers, Austin and Justin Woodward founded the crypto tax software. They leveraged their finance and tax compliance knowledge and experience to develop the software.
Austin Woodward (CEO and Co-Founder) is a certified public accountant (CPA). He has a master's degree in accounting from Brigham Young University. Before TaxBit, Austin worked as the controller and finance professional at Qualtrics. The CXM platform collects and organizes critical data about customers and employees.
Justin Woodward (Co-Founder - Tax Attorney at TaxBit) is a licensed tax attorney. He has a law degree from the University of Chicago. Before TaxBit, Justin worked as a judicial law clerk for the United States District Court. He also served as a legal researcher for the American Law Institute.
Other team members include:
- Brandon Woodward (Co-Founder/Product)
- Josh Peterson (Customer Support Specialist)
- Larry Christensen (Senior Software Engineer)
- Matthew Smith (Principal Software Engineer)
TaxBit Cost/Pricing
TaxBit's fees are like many other crypto tax software options on the market. The platform has four different tiers to choose from.
This is a breakdown of TaxBit annual packages:
- The Network plan costs $0. It offers unlimited transactions and wallet integration. It also offers email support and current-year tax forms for all TaxBit Network Partners.
- The Basic plan costs $50 per year. This plan includes unlimited transactions and wallet integration. You also enjoy live chat and tax forms for the current fiscal year. Other features include the DeFi tax engine, NFT tax engine, and historical tax forms.
- The Plus plan costs $175. It includes unlimited transactions and wallet integration, live chat, and tax forms for all fiscal years. Other features include tax optimizer, loss harvesting, portfolio performance, DeFi, and NFT suite.
- The Pro plan costs $500/year. It offers unlimited transactions and wallet integration, live chat, and tax forms for all fiscal years. There's also a tax optimizer, loss harvesting, portfolio performance, CPA review, DeFi, and NFT suite.
TaxBit Pros
- TaxBit was designed by CPAs and attorneys and complies with tax regulations.
- It supports a wide range of coins and exchanges.
- It has excellent customer support.
- TaxBit works for both consumers and enterprises.
- The user interface is simple and user-friendly.
- It offers a free version.
TaxBit Cons
- The paid plans can be costly.
- TaxBit has no mobile app.
- The software is only available to users in the United States filing their taxes to the IRS.
Alternative Crypto Tax Platforms
Other crypto tax platforms exist in the market, with good features and fair pricing. But do they match up to TaxBit? Check out how these alternatives compare to TaxBit.
TaxBit vs Accointing
Accointing is a crypto tax software and crypto tracking tool. It allows users to monitor the market and analyze crypto portfolios. You can also use it to access tax loss harvesting and generate tax reports to file taxes.
Accointing's free version can be useful for new crypto traders. It supports tax reporting for 25 transactions. But there are also transaction limits on the software’s paid plans. TaxBit, on the other hand, offers unlimited transactions for its free account and paid versions.
TaxBit vs Koinly
Koinly is a crypto tax software that allows users to connect different wallets, exchanges, blockchain addresses, and services. You can use it to get a clear picture of your invested money across various platforms.
Koinly simplifies tax calculation by determining the tax liability on your cryptocurrency exchanges. The results are exportable to other tax software. TaxBit also provides simplicity and allows for result exports to other platforms.
However, Koinly’s pricing is more affordable than TaxBit. It has $49, $99, and $179 plans for its Newbie, Hodler, and Trader plans, respectively. But, TaxBit’s Pro plan is pegged at $500.
TaxBit vs TokenTax
TokenTax is an all-in-one crypto tax and filing software for calculating complex taxes. The software's automation features make tax reporting simple.
Like TaxBit, TokenTax has a tax loss harvesting feature that can reduce tax liabilities. It computes and files your taxes.
However, TokenTax is more expensive than TaxBit. While it costs between $50 and $500 to use TaxBit, TokenTax plans range from $65 to $3,499. The plans also have transaction limits (500 for the basic plan and up to 30,000 for the VIP plan). TaxBit offers unlimited transactions on all plans.
TaxBit vs CoinTracker
CoinTracker is a well-known cryptocurrency tax service provider with over 500,000 users. It tracks your portfolio automatically and saves you money with tax-loss harvesting tools. This works like TaxBit's tax-loss harvesting feature.
CoinTracker’s pricing ranges from $59 to $199, which is cheaper than TaxBit. But it has a transaction limit of 25 and no chat support for the free plan. Users can only access unlimited transactions on the paid plan.
TaxBit does not offer live chat support on its free plan, but its unlimited transactions apply to all plans.
TaxBit vs ZenLedger
ZenLedger is a cryptocurrency taxation software that integrates with over 400 exchanges. This includes over 30 DeFi protocols. The software makes crypto tax simple for investors and tax professionals alike.
ZenLedger has a free plan that includes access to a tax professional. But, this plan only allows you to track 25 transactions, which is limiting compared to TaxBit. TaxBit’s free plan offers unlimited transactions.
The ZenLedger software is also priced at $49 for its starter plan and up to $999 for its premium plan. TaxBit’s plans are more affordable in this case, ranging from $50 to $500.
Verdict
Filing taxes can be stressful. TaxBit seeks to reduce stress and tax burden by simplifying the process for everyone dealing with cryptocurrencies.
TaxBit will analyze your crypto transactions and keep everything organized for tax filing. While there are several other options on the market, TaxBit outshines most.
It offers more access with its free plan than other platforms. And although it does not have a mobile app, it excels at crypto tax report generation.
FAQ
Is TaxBit Safe?
Yes, TaxBit is safe to use. It only collects crypto trade data and does not have access to your assets. Any security breach in the software may only affect your data and not your assets.
Is TaxBit Legitimate?
Yes, TaxBit is legitimate. Some of the world's largest regulatory agencies use it. It is one of the most reliable tax software in the industry.
It is also backed by some of the biggest names in finance. These include Fintech venture firm TTV Capital, Dragonfly Capital Partners, Collaborative Fund, Global Founders Capital, Table Management, Winklevoss Capital, Valar Ventures, Album VC, and others.
Who Can Use TaxBit?
Anyone can be a TaxBit consumer. Everyday crypto users can use it, as well as crypto exchanges and merchants. Institutions and even regulatory agencies can also use it.
Is TaxBit Available to Users Worldwide?
TaxBit is currently only open to people filing with the U.S Internal Revenue Service (IRS). But you can contact the platform's support team to learn how to use TaxBit in your country. The company is working on expanding the number of countries it supports.
Does TaxBit Integrate With Coinbase?
Yes, TaxBit integrates with Coinbase as well as other popular crypto exchanges.
