Navigating the world of taxes can be difficult for your regular income, but what about your cryptocurrency taxes? For many people, cryptocurrency taxes are a daunting subject with many technical considerations to keep in mind. One small slip up could result in a domino effect that may result in thousands of dollars of fines that could have otherwise been avoided. This is where having a crypto taxes calculator can give you peace of mind and help you speed up the process.
The Role of Crypto Tax Calculators In the Tax Liability Calculation Process
If you’re heavily involved in the world of cryptocurrency, you’re likely using many different platforms to buy and sell cryptocurrency. Popular platforms include Coinbase, Gemini, BlockFi, or Kraken, to name a few. One major advantage of using a crypto taxes calculator when filing your taxes is that it compiles all of your data across platforms into one singular location.
You won’t have to spend time tracking down specific purchases or compiling information across platforms. For most basic crypto tax situations, the crypto taxes calculator tool will automatically apply the relevant tax provisions so you have an accurate tax payable on your cryptocurrency transactions.
The best crypto tax calculators also provide you with a complete portfolio view of your transactions. This makes it easy to notice patterns and make adjustments in future purchases or sales.
Plus, these platforms offer custom exporting and reporting options that help CPAs to ensure accurate tax liabilities. Your CPA will be able to go through your information to check for accuracy and make any changes as necessary.
The Limitations of Crypto Tax Calculators
Despite the many benefits that crypto tax calculators offer, they also have some downsides to keep in mind. Some platforms rely on an API to aggregate and sort the data while others require CSV uploads that are downloaded from individual sites. CSV uploads have the potential to be incomplete, inaccurate, or both which will render the data unreliable. Unless you have a crypto tax accountant meticulously checking your numbers, there’s a chance this data could be wrong.
If you conduct more complex crypto activities such as margin trading, staking, or forking, you might not get the same benefits from a crypto tax calculator as someone who manages crypto on a more basic level. Many of these platforms also charge a subscription fee that can be costly and confusing to use to the average person.
Benefits of Pairing Your Crypto Tax Calculator with a CPA
The best way to go about filing your cryptocurrency taxes in the most accurate way possible is to use both a crypto tax calculator combined with a seasoned CPA. The automated data compilation that a crypto tax calculator offers combined with the sheer knowledge and understanding from a CPA can help you feel confident that your return is accurate. Taking this step can also make it easy to plan and prepare for future tax years.
Avoid Crypto Tax Pitfalls with Founder’s CPA
Don’t let cryptocurrency taxes scare you. When you have a professional team like Founder’s CPA on your side, rest assured that regardless of how complicated your cryptocurrency activity is, we work hard to provide you with accurate and timely returns.
For additional information on how we can help or to take advantage of our complimentary assessment, please contact us today.