- Did you buy or sell any cryptocurrency
or NFTs in the past year,
and are you getting ready to file your taxes?
If so, stick around because there are definitely
some software and tools that you'll need to get
in order to file your taxes correctly with crypto and NFT.
Stick around.
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Hey, guys, this is Justine with The College Investor,
investing and personal finance for millennials.
So cryptocurrency has clearly just taken
over the past couple of years and the same thing for NFTs.
So the IRS is really trying
to figure out how do we actually tax this correctly
and make sure people are reporting this correctly
on their tax return?
The IRS treats cryptocurrency like property.
So whether investors made or lost money
by trading, staking rewards, or earning interest,
each of those different actions
has different tax implications.
But here's the thing,
because cryptocurrency is not the same as the US dollar,
you actually have to calculate
the fair market value of that crypto.
Now, from one or two transactions, that's no big deal,
but let's say that you've made several dozens
or hundreds of transactions within the year,
you definitely want a tool
that can help you do that quickly.
At this time, TurboTax Premier
is the only tax software company
that will calculate your tax liability on your crypto.
However, I can only do this for transactions
that were made on a few of the major exchanges.
And if you didn't make any trades on those exchanges,
then you're gonna have to fill in the gaps,
and that's where crypto tax-specific software
has come into play and actually has gained a lot
of awareness because there is such a need
for this type of tool
when it comes to filing your taxes with cryptocurrency.
So let's talk about that specific software.
We broke it down into two different categories,
those with a decentralized finance approach
or the centralized finance approach.
So the DeFi or the CeFi, if you will.
Let's talk about the DeFi crypto tax software available.
The best overall comes from a TaxBit.
The TaxBit engine will help you calculate
that fair market value and generate free tax reports
given your transaction history.
Those with DeFi transactions
and NFT investors will like to take a look at TokenTax.
TokenTax is the best full service for the DeFi approach.
It is costly but it'll definitely get you the reports
that you need.
So for $149, you can also take a look at ZenLedger.
ZenLedger has preferred integrations with TurboTax,
so this makes it really easy
to connect those two software applications together
so that you are reporting the right amounts
for your crypto and NFT trading.
But if you were a low volume trader
and you want something that's low cost,
you'll definitely wanna take a look at Koinly.
Koinly offers paid tiers that are lower
than that of ZenLedger
but it still gives you the right reports that you need.
Now, if you're looking for the centralized trading software,
so investors actually make their trades through an exchange
and then that company will facilitate the trade.
So CeFi traders are going to have a more straightforward
approach when it comes to their tax treatment.
But let's take a look at the different software
that is available for you.
If you only traded using Coinbase,
then there's no additional tool that you need.
You simply connect Coinbase to TurboTax Premier
and they'll be able to import those trades
and transactions for you and calculate your tax liability.
Now, if you had up to 25 transactions,
or low-volume transactions,
then you'll wanna take a look at ZenLedger.
ZenLedger produces that 8949 IRS form
that you will need in order to file your taxes,
which makes this tool a really great way to get that form
and know exactly what your tax liability is
when you upload that into your tax software.
Now, for $99, the best for everyday traders
is with CoinLedger.
It's a great price point
and it gives you all the functionality
that you need to file your taxes.
Now, this is a great price point
for active traders between 100 to 1,500 transactions
who don't wanna overpay for the thousands of thousands
of transactions that some crypto investors do.
Now, for all others, you'll wanna take a look at TaxBit.
TaxBit generates that IRS Form 8949
and then you can connect it
into TurboTax Premier, get those forms,
and then calculate your tax liability as well.
So if you were a crypto trader
in the last year or even NFTs,
you will definitely need two different software tools
to help something that is crypto tax-specific,
such as the software that we've mentioned, and then pair it
alongside your typical standard tax return software.
TurboTax Premier is the best overall tax software we found
for crypto traders.
Because it syncs up to things like TaxBit or Coinbase,
it makes it really easy for things to smoothly work together
and helps you avoid any errors
when it comes to reporting any gains or losses
associated with your crypto or NFTs.
Super helpful to have those right tools in place,
even if it does cost a little bit extra for you to do so.
Which crypto tax software are you using?
Let us know in the comments below.
By the way, we have complete walkthroughs
and reviews of all the latest tax software available
to you at thecollegeinvestor.com.
Like this video if you thought it was helpful
and we'll catch you in the next one.
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