One of the largest problems with crypto is figuring out how taxes work and 2 of the leading software is going to be Koinly and Cointracker.
What both of these products do is scan all your wallets, exchanges and then creates a report telling you what you owe in taxes and can even import them into Turbo Tax or Tax Act.
Trying to figure out crypto taxes on your own can be a royal pain in the ass, so both of these products can be a lifesaver.
The real question is which software you should use…
The winner is Koinly! Koinly for most people will be less expensive, supports more crypto and exchanges, is better for liquidity mining, but Cointrackers has a better user experience.
Keep reading and I’ll share how both of these software’s are different in pricing, how many exchanges and cryptos they support, how they handle liquidity mining, ease of use, and 2 tips to save you the MOST money on taxes.
Also, I’m not a CPA accountant and primarily made this blog post to help myself decide which software I should use. I hope you gain some benefit from it.
Let’s face we are ALL cheap bastards right? Who wants to pay more than they have to?
Cointracker has a FREE version that does support up to 25 transactions in a year. This includes capital gains tax and cost basis. Cost basis means the value of an asset when you purchased it and how much it was when you sold it.
You might be wondering what is a taxable transaction?
- Buying Crypto
- Selling Crypto
- Trade Crypto
- Transfer Crypto
- Withdrawal Crypto
- Liquidity Mining
Yea, you’re probably going to be using the higher-up-priced plan!
For 1,000 transactions the price is $199 for the year. The problem is that anything over 1,000 transactions and the pricing are not known. It’s a case-by-case situation.
Koinly also has a free version and it includes 10,000 transactions. The problem with the free version is you can’t import it into Turbo Tax or Tax Act.
They also have a plan where it handles 3,000 transactions and it’s $179. For 10,000+ transactions it’s $279.
In conclusion, if you only have a few transactions and want to import them into Turbo Tax or Tax Act then Cointracker wins. If you are into DEFI, Staking, and do more transactions then Coinly will probably be less expensive.
Since more people probably have more than 30 transactions Coinly is the winner.
Exchanges and Cryptocurrencies Supported?
Maybe you love dumpster diving for shit coins or use unknown exchanges? Let’s see which software has you covered.
Cointracker supports over 2,500 cryptocurrencies and more than 300 different exchanges. I didn’t know that many exchanges existed!
Coinly supports 17,000 cryptocurrencies and more than 350 exchanges.
Looks like Coinly is the winner for this round!
Liquidity can be a little confusing when it comes to taxes. Both say they can handle DEFI (decentralized finance) and liquidity mining falls in this category.
With Coinly a post in 2021 says they can deal with 90% of Uniswap pairs and will work towards 100%.
When I looked at Koinly it says it supports all the major liquidity mining projects.
When I looked at reviews of both products Koinly was the superior one. The review from Forever Blogger you can check out his post right HERE, he says Cointracker doesn’t work. When it comes to liquidity mining it’s best to use Koinly and that is what he uses.
I’m going to say Koinly is the winner here.
Ease of Use?
How I determined ease of use is watching demos of 2 people using both software. Then I made a decision on what I thought was easier to use and why.
After looking at both products, I prefer Cointracker. It has a nice user interface and breaks things where you can see all the money you’re earning from all your wallets.
It also breaks down long-term capital gains tax and short-term capital gains tax.
This round I’m going to give it to Cointracker.
Both of these products can work in many countries and can use different currencies. The funny thing is that tax laws are similar in MANY countries.
You could say taxes are an incentive to do what the government wants.
You may have thought about NOT reporting crypto income, but the problem is the IRS (In the U.S.) can come after you FOREVER. By filing something EVEN if it’s wrong, the IRS only has 3 years to audit you. If your income is wrong by 25% then the IRS can come after you for 6 years.
The best thing to do is to file, but try to save yourself as much money as possible. The way to save money is to keep a cryptocurrency for over 12 months before you sell it.
After 12 months you pay long-term capital gains tax and this is less money than if you would have sold it within 12 months.
Another way to save money is by choosing LIFO instead of FIFO with your tax forms. LIFO stands for Last In, Last Out and this means you sell the last coins you purchased.
Since they are the last coins the amount of money you made is probably less than the first ones, right? Less money you earned the less you pay in taxes.
Also, there is another software called cointracker.info that I looked at but you pay PER month to use the software. To keep things simple I just wanted to compare cointracking.io vs koinly.io.
Lastly, I’m currently using CakeDefi for liquidity mining and staking. Both are in the process of implementing them for 2021 taxes.
If you use CakeDefi to earn money you can check this link here on how to import the data into cointracking.io.
I’m planning on using Koinly for taxes, but if they don’t work with CakeDefi, I’ll probably go with Cointracker.
You can learn more about Koinly by clicking on the link HERE.
I hope this blog post might have helped you a little bit when choosing which crypto tax software to use. Bye for now.