TaxBit Review: The Best Cryptocurrency Tax Program

TaxBit Makes Cryptocurrency Taxes Easy $50+
Overall
4.5
  • Features
  • Ease of Use
  • Reliability
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User Review
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TaxBit is THE Cryptocurrency Tax Software

Features 4/5
Compatibility with all exchanges, thousands of cryptocurrencies and automatic integration all combine to satisfy the accounting needs of 80% of crypto investors. Few, if any, cryptocurrency investors will be left out having to do accounting and tax by hand.
Ease of Use 5/5
It doesn’t get simpler than this. Simply provide API access to each exchange and enter wallet address to automatically log transactions, maintain cost-basis.
Reliability 5/5
Taxbit has been around for several years, has responsive support and virtually zero downtime.

Tax regulations for cryptocurrency are continually evolving. In the United States of America they are becoming more fleshed out, but still leave much to the interpretation of the investor. This leaves many investors struggling to clearly interrupt and apply the tax code to the fullest advantage.

The IRS considers any transaction, such as buying, selling or transferring cryptocurrency, as a taxable event. To save thousands of investors from headaches, TaxBit was created to simplify the process and save investors money on taxes. Without the use of specialized software or a specialized accountant, investors could be left with higher tax liabilities.

Cryptocurrency Accounting is Difficult

Issues with Exchange Generated IRS Forms

Most exchanges provide 1099-K reporting income to the IRS. The form only states income. For instance if you buy $10,000 of Bitcoin at $10,000/BTC then sell at $9,000/BTC, this $1,000 loss is actually reported as $9,000 of income on the 1099-K. See how this would lead to tax issues? This would result in an incorrect tax bill because the 1099-K does not account for the cost-basis or transaction fees. TaxBit automatically calculates the cost-basis which increases tax burden on the customer.

Tax Optimizer

TaxBit automatically tracks cost-basis and selects the best lot to sell for minimizing tax liabilities.

TaxBit Tax Optimizer allows one to determine the tax impact of a trade, before making it. It does this by reviewing the cost-basis of all lots and determining which specificID would provide the lowest tax impact. Typically, the best cost-basis by using a SpecificID to minimize tax liabilities.

It can also be used to select specific lots or review different accounting procedures and apply them retroactively to minimize tax impact.

Top Reasons to Use TaxBit

Accurate Tax Accounting, above everything else

TaxBit was developed by industry leading accountants, lawyers, and software developers to create the simplest, yet most comprehensive cryptocurrency tax software available to generate required IRS forms for tax reporting. They also received $100 million in Series A funding from some of the biggest names in the industry, including the Winklevoss Brothers, Global Founders Capital, and more.

You may select one of the two options:

  • HiFo – Highest in First Out: Best for reducing current tax impacts.
  • LiFo – Lowest in First Out: Best for reducing future tax impacts.

TaxBit is constantly reviewing tax regulations, legal codes, and updating the software with the latest programming to make the process as accurate as possible. This saves customers on tax liabilities and reduces headaches that could be caused when personally filling out IRS required tax forms. No one likes doing taxes, but everyone enjoys the refund (or reduced tax liabilities).

TaxBit testifies that its results are accurate. An added side effect of using TaxBit is saving time, as crypto accounting can be difficult and above all, time-consuming. With the pro level subscription, TaxBit will coordinate directly with the IRS on your behalf!

Ease of Use and Customer Support

No matter how reliable and easy to use a software may be, you want to know that help is there if/when you need it. In fact, the software is so simple to use, I couldn’t believe it. As of May 1, 2021 TaxBit has a Trustpilot service review score of 4.4/5, with 76% excellent 5/5 reviews and 11% great 4/5 reviews.

In my experience, the support team responded within four hours of my first message. Plus, their first response answered my question. CPAs and tax attorneys that founded TaxBit. This means that they’re knowledgeable in not only supporting TaxBit as a product, but in crypto and financial services as well. Although TaxBit may not have every feature for enthusiasts, this is a yearly subscription as opposed to a one-time report. This means the reports and forms can be generated several times, and tweaked to the best possible outcome.

Partnerships with crypto’s biggest players

The cryptocurrency market is a rapidly evolving and young asset class. Taxbit has been developed and coordinated with industry experts is necessary to provide the most accurate and up to date information for their customers. TaxBit partners directly with crypto’s biggest industry leading associations, most popular exchanges, and professional accountants across the industry in a variety of backgrounds. This helps TaxBit to stay up to date and work on software integration from the onset to proactively resolve discrepancies.

TaxBit users benefit from the company’s insider access to not only technical systems (API integrations, for example), but knowledge and insight from today’s brightest minds in the crypto space. Below is a shortlist of their biggest affiliations:

TaxBit Pricing Options

TaxBit offers multiple pricing options that provide different options for different types of cryptocurrency investors. All options are provided in a yearly subscription format. The options are as follows:

  1. $50/year for the Basic plan – 250 transactions: Includes live chat and tax forms (IRS 8949) for the current fiscal year.
  2. $175/year for Plus(+) plan – 2,500 transactions: Includes live chat, tax forms for all fiscal years (back to 2014, currently), tax optimizer, loss harvesting, portfolio performance and DeFi Beta.
  3. $500/year for Pro plan – 25,000 transactions: Includes live chat, tax forms for all fiscal years (back to 2014, currently), tax optimizer, loss harvesting, portfolio performance, DeFi Beta and CPA Review.

Although primarily a consumer software, they do provide enterprise-level solutions for the most complicated situations. It is recommended to contact their support directly for more information.

Although this program is used to generate the required IRS forms for tax filing. It can also be used to simulate trades and determine tax impacts, prior to execution. This makes it useful year-round (especially granted crypto’s volatility). 

Supported Exchanges

TaxBit supports any exchange that allows a CSV export of transactions through a secure read-only API interface. TaxBit supports most of the world’s most popular cryptocurrency exchanges, below is a partial list:

  1. Binance
  2. Binance US
  3. BitStamp
  4. BlockFi
  5. Bitfinex
  6. Coinbase and Coinbase Pro
  7. Uphold
  8. OkCoin
  9. Kraken
  10. and Many, many more!

Supported Cryptocurrencies

TaxBit currently supports over 2500+ cryptocurrencies! If they don’t support what you want; you can email support and they will review it and possibly add it in the future! It’s simple, just add the address of the cryptocurrency and you will add it to the software. When you click sync transactions, it will sync transactions and it will determine the fair market price and classify it as incoming or outgoing.

It also supports: staking, airdrops, earned interest, buying/selling, forks, income, etc.

Tax Optimizer and IRS forms

TaxBit is currently only available to generate tax forms for the United States of America (USA). They do plan on adding additional municipalities and governments as regulations continue to evolve and settle down. For more information, refer to their blog post.

Some of the forms TaxBit may generate include the below:

  • IRS Form 1099-MISC – This form is generated using the interest earned on accounts, affiliate revenues, etc. TaxBit automatically generates this form if it is necessary to file based on transactions recorded.
  • IRS Schedule D (Form 1040/1040-D) – This form details short-term capital gains/losses by including the date, which asset is sold, cost-basis, and proceeds/losses generated form the sale.
  • IRS Form 8949 – This form details long-term capital gains/losses by including the date, which asset is sold, cost-basis, and proceeds/losses generated form the sale.

Pros and Cons of TaxBit

Pros
+ Best for people who invested in Cryptocurrency on exchanges
+ Industry leading accuracy
+ Generates required tax forms
+ Tax Optimizer can reduce tax liabilities
+ Easy to use and update
+ Simple integration with a variety of platforms, exchanges, and cryptocurrencies.
Cons
– No hardware wallet support (yet)
– Limited DeFi support (will probably be added in the future!)
– No option for manually labelling stolen/lost transactions
– Limited expert/enthusiast feature support for those with multiple hardware wallets, exchanges, etc. (this is bound to become better integrated over time)

Sign Up Now for 10% Off

TaxBit does allow a free 14-day trial to anyone who signs up. This allows you to test exchange compatibility. An exclusive offer to cryptocrooks subscribers, you may save 10% with our promo code: SUZBrsBw