Crypto traders, regardless of their experience in the crypto world, would admit that they benefit a great deal from cryptocurrency tax calculators. Given the unique and often confusing nature of cryptocurrencies, it is fair to say that cryptocurrency tax calculators are essential if you want to simplify your crypto endeavors.
In this article, we will look into the basics of cryptocurrencies, their impact on the market, risks, crypto tax evasion, and cryptocurrency tax calculators.
Cryptocurrency, at a basic level, is a digital medium of exchange that makes use of robust cryptographic functions to verify and secure financial transactions.
Cryptocurrencies are known to operate in the absence of a central regulatory body. Unlike in the case of traditional fiat currencies, there is no central server to monitor transactions in this payment system.
Cryptocurrencies operate on Blockchain technology, which means that every component in the Blockchain has a list of all the transactions that take place.
Transactions can happen only when the private key of the sender signs them. For example, if you transfer Bitcoins to someone, your private key would have to approve the transaction to make it happen.
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Cryptocurrencies – Value and Scope
The emergence of Bitcoin seems to be paving the way for the dawn of a new economy, where data will be considered digital gold and instruments like cryptocurrencies will be the standard medium of exchange.
Cryptocurrencies are immune to external influence and are projected to increase in value over time. It is of no surprise that people all over the world are getting involved with cryptocurrencies at an ever-increasing pace to protect themselves from the devaluation of their national currencies.
Regardless of public perception, cryptocurrencies are here to stay and irrevocably change the economy. They have their own merits and demerits. Here are some noteworthy crypto characteristics
What are the Features of Cryptocurrency?
Cryptocurrencies have to their credit, a few critical traits that differentiate them from conventional fiat currencies.
When you confirm your transaction, there is no going back. No one can reverse it. No bank or central authority has the power to modify or undo your purchase. The main reason for the irreversibility of transactions on this system is due to the high level of accuracy. Once a transaction is validated and added to a Block it considered complete and authentic, and since there was no error in the completion of the transaction, and the transaction is considered authentic by the network, it will not be reversed.
Crypto traders Do Not Need Permission
There is no centralization in this system whatsoever, which means that you do not need permission to use cryptocurrencies. You can download the software almost instantaneously and send or receive cryptocurrencies.
While crypto transactions are irreversible, they are secure. The owner of the private key is the only entity that is authorized to send cryptocurrencies. It is nearly impossible to manipulate the system due to its sophisticated cryptographic system.
Crypto accounts cannot be traced back to their real-world identities. You send and receive Bitcoins on addresses that are chains of 30 characters. Analyzing the transaction flow is possible, but you cannot determine the real-world identities of the accounts.
Why do you need a Cryptocurrency Tax Calculators?
Calculating your crypto taxes is known to be a tedious task for beginner crypto traders and veterans alike. It only becomes more complicated with the increase in the number of transactions.
However, there are several cryptocurrency tax calculators that you can employ to streamline the process of filing crypto taxes. Crypto tax calculators can also be used to generate reports for crypto taxes.
Cryptocurrency Tax Calculators you Ought to know About
TokenTax provides undoubtedly one of the simplest ways to report your crypto taxes. This crypto tax platform supports every major exchange.
Its tax dashboard displays all your transactions, your total profit, and loss, your capital gains, your crypto tax liability, your mining, and so much more.
TokenTax is known to be the only crypto tax platform that correctly handles margin trades from Bitmex, Deribit Bitfinex, Poloniex, FTX, and so forth.
It serves every country. You can use TokenTax in the United States, Canada, United Kingdom, Germany, Sweden, or Japan. They also welcome ex-pats and international exchange users.
CryptoTrader.tax enables its crypto traders to calculate their capital gains or loss in minutes. CryptoTrader.tax boasts a user-friendly interface that makes it easy to import your trades and make sure that you are not overpaying your taxes. It presently supports exchanges like Coinbase, Bittrex, Gemini, Binance, and Poloniex.
You can export your crypto tax report without hassle. Be sure to include the following documents:
- Cryptocurrency Income Report
- Short & Long Term Sales Report
- IRS Form 8949
- Audit Trail Report
- End of Year Positions Report
- TurboTax Direct Import
- TaxAct Direct Import
CoinTracker is a popular crypto-asset tracker and crypto tax reporting software.
Its platform is known to automatically synchronize your asset balances and transactions from your exchange accounts. The Cointracker interface displays your digital assets and their respective trading history.
To make things simple for you as a crypto trader, it utilizes a unified dashboard. It also provides a performance tracker, which gives you a clearer picture of your crypto investment performance over time.
Zenledger is a new and promising cryptocurrency tax calculator.
It allows crypto traders to import their cryptocurrency transactions and calculate their crypto taxes.
When you import your transaction history, the crypto tax tool generates a whole range of parameters that includes capital gains, income, donations, profit and loss statements, auto-fills tax forms, and so forth.
Some of its noteworthy features are Audit report, CPA access, designation, unlimited exchanges, FIFO/LIFO, crypto as income, ICOs & airdrops, Tax-loss harvesting, FinCEN/FBAR alert, and more.
There you have it – a brief guide to help you dive head-first into the world of cryptocurrencies and just about everything it entails. These cryptocurrency tax calculators are only a few of many options for you to choose from.