Best crypto and NFT control software for 2022


    best crypto and NFT control software

    Over the past year, the average daily crypto trading volume has more than doubled. And that increase means more people will need to report capital gains and losses from their businesses when filing taxes in 2021 (in 2022).

    Unfortunately, most traditional tax software companies are ill-equipped to handle the complex taxation of crypto tokens and NFTs. If you are a crypto trader, you will likely need to purchase crypto tax software and a traditional tax return tool. We explain why you need both and how to choose the best for yourself.

    Do you need separate software to file crypto taxes?

    The IRS treats cryptocurrency as property. Investors can make or lose money by trading, or earn interest or stake bonuses. Each type of income has different tax implications.

    Unlike income paid in a fiat currency, the fair market value of crypto gains, losses, and income is not always easy to calculate. To do this, taxpayers must look up the US dollar to token exchange rate at the time of the token purchase or acquisition and the value at the time of sale.

    Doing this by hand for 1-2 transactions is no big deal. However, the more trades you make, the more likely it is that you will need software to assist you.

    Currently, TurboTax Premier is the only major tax software that calculates your tax liability on crypto. However, this is only possible for transactions that have taken place on some of the major exchanges. If you are not trading on these exchanges, you will have to manually calculate the fair market value of your transactions.

    Software specially developed for crypto trading closes these gaps. Crypto-specific accounting software has been available since 2017, but its importance has exploded in recent years. Today there are more than half a dozen reputable companies that can accurately calculate the taxes due based on your trading history.

    In most cases, we recommend crypto traders to use tax software to calculate their tax burden. Occasional traders can even access this type of software for free.

    What reports do I need to submit my crypto taxes?

    Most crypto traders only need to submit records from IRS Form 8949 to Schedule D. This is the same schedule used for reporting stock sales.

    TurboTax has a robust support mechanism for transferring crypto transactions from Form 8949 to your tax return. TaxAct also supports adding the form as an attachment.

    However, the companies reviewed below also produce reports that are required to complete other filing reports from non-trading deals. These are some of the other sections of the tax return that may apply to crypto investors.

    • Annex 1: Gifts (including airdrops) or income from forks or hobby income must be reported in line 8 of Appendix 1 as other income. All of the software packages included in this review allow users to manually enter these transactions into the software. The information from this must be manually transferred to Schedule 1.
    • Plan b: Investors who have earned interest or rewards on lending or wagering must report their investment income in Appendix B. Outside of the crypto world, you would expect this information to be displayed on a 1099-INT or 1099-DIV extract. However, Coinbase is releasing its information on a 1099-MISC.
    • Schedule C: Investors mining cryptocurrencies may be able to be deducted from their taxes. All mining activities should be reported in Appendix C. If you happen to receive a 1099-MISC in connection with this activity, it can be used to report your income. However, most miners need to use a tool to convert their mining activities to US dollars.

    Unfortunately, each software has different requirements for entering and reporting this information. Despite the differences, each recommended software supports these lesser-used options in some way.

    Best crypto and NFT control software

    The best crypto and NFT tax software will calculate the taxes you owe as a result of your blockchain activity. Most importantly, these tools calculate capital gains and losses based on your trading activity.

    All of the companies reviewed here create IRS Form 8949, which is used to calculate capital losses. The information on this form will be included in Appendix D of your tax return.

    These software companies also create reports that can be used to report income from interest (or credit awards) or mining-like activities. Investment income is shown in Appendix B and mining income (and related expenses) are shown in Appendix C.

    Our list below is divided into overarching categories:

    • Best DeFi tax support software
    • Best CeFi tax support software

    Read on to see all of our tips for the best crypto and NFT software for 2022.

    Best DeFi tax support software

    Decentralized Finance (DeFi) is a trustworthy, permissionless financial ecosystem. It emphasizes «smart contracts» and trust in technology rather than business units. A larger number of NFTs are produced and exchanged using DeFi. Smart contracts enable individuals to prove possession of a Unique Token (NFT).

    In the eyes of the IRS, an NFT is the same as any other token. The fair market value for each NFT is determined based on the conversion from ETH to USD (or whatever the underlying blockchain supports the NFT). There are other uses for DeFi, but NFT building and trading are among the most popular right now.

    Overview of the best DeFi tax support software

    Low cost for low volume traders

    Best full service – TokenTax

    TokenTax is a full service crypto control software company. The company specializes in DeFi and other «extraordinary» crypto problems. For example, it helps with forensic bookkeeping based on no longer existing exchanges. While it’s very expensive, it’s a top option for NFT investors and those with DeFi transactions.

    TokenTax logo

    Best value for money – ZenLedger

    ZenLedger opens DeFi support at its $ 149 premium tier. ZenLedger has preferred integrations with TurboTax, making it an affordable, high quality option for DeFi crypto traders.

    ZenLedger logo

    Low cost for low volume traders – Koinly

    Koinly is a little more expensive than ZenLedger, but it supports DeFi at every level, including the $ 49 newbie tier. The company also supports taxes for algorithmic traders with more than 500,000 transactions per year.

    Koinly logo

    Best CeFi tax support software

    Most crypto traders use Centralized Finance (CeFi) for their investing activities. Traders in this camp conduct most of their trades through exchanges on which a company has trading activities.

    Users can transfer tokens from the exchange to a hardware crypto wallet. However, your primary trading activity takes place in one central location.

    At tax time, CeFi dealers usually enjoy a simpler tax treatment. They can usually download their activity directly from an exchange and provide evidence of the fair market value of all of their trades. These are some of the best options for CeFi dealers.

    Best for Coinbase users – TurboTax Premier

    If you’ve only traded with Coinbase, you don’t need an additional tool. Just pay for TurboTax Premier. TurboTax can connect directly to the exchange and read all of your transactions. It calculates the taxes that are incurred on all of these businesses. You don’t have to pay for any additional software.

    Turbotax logo

    Free for low volume – ZenLedger

    ZenLedger generates the 8949 form free of charge for users with up to 25 transactions per year. The product is competitively priced at every level, so crypto traders should consider it (especially those with 1,500-5,000 transactions). The product supports all crypto revenue, including revenue from stakeouts, rewards, and other sources.

    ZenLedger logo

    The best for everyday traders – CryptoTrader.Tax

    offers a «Day Trader» level for filers with 100-1500 transactions. This $ 99 option is a great price for many active traders who don’t want to pay extra to support thousands of transactions. DeFi support and other features will be available soon.

    CryptoTrader.Tax logo

    Best ongoing support – TaxBit

    The TaxBit software offers ongoing insight into tax liability and the tax reports at the end of the year. This tool is an amazing addition for investors who are actively trading and have had too few withholds over the past year. DeFi support is currently in beta.

    TaxBit logo (new)

    Final thoughts on the best crypto and NFT control software

    In 2022, most crypto investors will need the combination of a custom crypto control software AND a typical tax return software. TurboTax Premier is our top tax software for crypto traders this year, but most traders need to combine it with custom tax software.

    For the crypto-specific software, most users should consider ZenLedger, CryptoTrader.Tax, or TaxBit. However, there may be edge cases where an alternative to these may offer better functionality or lower cost.

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