Anybody with the faintest idea about cryptocurrencies and crypto taxes would admit that a cryptocurrency tax calculator is an indispensable tool in this age. The thought of filing and reporting crypto taxes, coupled with the vague rules stipulated by the Government has caused a lot of confusion.
Most people get most of the information regarding cryptocurrencies and the tax regulations around them from popular media, instead of paying attention to the regulations themselves. However, in their defense, there are set rules for currencies and assets like property, but not cryptocurrencies.
If you are utterly clueless about cryptocurrencies, let’s start with the basics.
What is a cryptocurrency?
Cryptocurrency is a digital medium of exchange that makes use of strong cryptographic functions to verify and secure financial transactions.
Cryptocurrencies and developed on Blockchain technology, one reason being its most noteworthy characteristic, the absence of a central regulatory body. In the case of traditional FIAT currencies, a central server is put in place to prevent double-spending between the two entities in a payment system.
However, in a system like a blockchain, that is decentralized, there is no such server. Hence, every component of this network needs to have a complete list of the transactions that occur. This is vital to ensure the validity of future transactions.
Transactions can occur only when the private key of the sender signs them. For instance, if you were to transfer bitcoins to someone, your private key would have to mandatorily sign the transaction to make it happen.
Cryptocurrency Risks
Before we get into the idea of using a cryptocurrency tax calculator, it is essential to consider the risks that come with cryptocurrencies.
Irrespective of your actions, there is no chance of undoing a transaction once it is confirmed.
No bank, local, or central authority can help you, should you confirm your transaction. In other words, Crypto transactions have no safety net.
It is impossible to trace crypto accounts back to their real-world identities.
The cryptocurrencies that you receive are on addresses that consist of chains with multiple characters. While it is possible to analyze the transaction flow, there is no way to trace the real-world identities of the crypto accounts.
The upside of the absence of a safety net is that transactions are secure. The complexity of the cryptographic functions makes it impossible to hack the system.
Permission is not needed to use cryptocurrencies as there is no central authority that governs them. Transferring cryptocurrencies is straightforward. You only need to download the software.
The future and scope of Cryptocurrencies
As mentioned earlier, cryptocurrencies are utterly immune to external influence. This means that they cannot be controlled or compromised through external influence.
Owing to some of their inherent characteristics of having a high Byzantine Fault Tolerance and being extremely secure, cryptocurrencies are paving the way for a new economy.
Fortunately, or unfortunately, cryptocurrencies seem to be here to stay and revolutionize the market as we know it.
If you’ve decided that cryptocurrencies are worth investing in, be sure to check out the following cryptocurrency tax calculators.
Cryptocurrency tax calculators worth checking out
Koinly.io
Given its intuitive and user interface, it is a popular cryptocurrency tax calculator for beginners and seasoned traders alike.
A new user can start by using this cryptocurrency tax calculator for free and pay for it only before generating the final reports.
Keep in mind that Koinly’s reports support almost every known accounting method.
CoinTracking
Cointracking is undoubtedly your solution for calculating crypto taxes.
A noteworthy factor about it is that it is compatible with some third-party cryptocurrency tax calculators. TurboTax is an example.
Bitcoin.Tax
Bitcoin.Tax is known to be a trusted cryptocurrency tax calculator. Old school crypto traders and investors often make use of Bitcoin.Tax.
However, its demerit is that it appears to be slightly dated when compared with its competitors. However, this is still in the running if you are interested in a traditional cryptocurrency tax calculator.
BearTax
BearTax boasts a simple user interface as well as a design language. It has a variety of features and pricing options to its credit, making it a worthy cryptocurrency tax calculator.
It is similar to its competitors in that it is compatible with the most used exchanges and cryptocurrencies. BearTax plans to introduce new and intuitive features in one of the subsequent updates.
Zenledger
Zenledger is one formidable and simple to use cryptocurrency tax calculator to watch out for. Keep in mind that you can start using it for free, but you will have to select a paid package after a period of use.
Users can seamlessly import their cryptocurrency transactions and history and calculate their capital gains and crypto-related income.
The cryptocurrency tax calculator does a fantastic job of generating all the necessary crypto tax-related details like capital gains, income, donations, P&L statements, and lastly, closing reports. All in all, it makes for a great cryptocurrency tax calculator.
Conclusion
While the confusion and frustration surround crypto taxes are no secret and certainly understandable, there is a way to navigate the crypto-related chaos.
We can guarantee you that getting a reliable cryptocurrency tax calculator will do you wonders.
With the advent and increasingly widespread use of cryptocurrencies, you can expect to see a rise in the number of cryptocurrency tax calculators as well.
Taking care of your cryptocurrency taxes has never been easier than it is today, so make sure you get an excellent cryptocurrency tax calculator immediately.
