So, you’re a seasoned cryptocurrency investor that has positioned a whole bunch, if not hundreds of trades over the previous 12 months. Whereas that is prone to be a logistical nightmare in your tax reporting endeavors – this doesn’t matter, as a result of cryptocurrency income usually are not taxed, proper?
Fallacious!
Quite the opposite – whereas the particular tax therapy of cryptocurrency buying and selling will range from jurisdiction-to-jurisdiction, a major variety of tax authorities now require you to incorporate cryptocurrency capital good points inside your tax return.
As such, it’s completely elementary that you simply get your cryptocurrency taxes so as – in any other case, you can be getting a quite demanding letter out of your native tax authority. In the end, tax evasion is a critical crime no matter the place you’re based mostly, which is why it could be value contemplating an automatic cryptocurrency tax platform like BearTax.
The platform lets you monitor your entire cryptocurrency trades in an autonomous method, that means the underlying software program will present a breakdown of your income and losses – and crucially – how a lot you owe to the taxman.
Fancy discovering out whether or not or not the crypto-centric software program supplier is best for you? If that’s the case, you should definitely learn our in-depth BearTax Evaluate.
What’s BearTax?
In a nutshell, BearTax is an internet platform that provides cryptocurrency portfolio monitoring providers – with the view of ascertaining your total income and losses.
In doing so, this makes it a seamless course of in relation to submitting your annual tax returns. BearTax does this by way of an modern API-based algorithm that hyperlinks up together with your chosen cryptocurrency exchanges. This consists of the likes of Binance, Gemini, KuCoin, Coinbase – and plenty of others.
The overarching promoting level of BearTax is that it makes the not possible potential. By this, we imply it not solely solves the woes of making an attempt to calculate your cryptocurrency capital good points in {dollars} and cents, nevertheless it additionally lets you assess what taxes you’re prone to owe.
With out using a software program platform to do that for you, countless hours of guide work can be required.
Not often do exchanges provide you with a full breakdown of how a lot you’ve made or misplaced in fiat forex – which is what tax authorities just like the IRS are taken with. These points are additional amplified in case you’re a day dealer, or an investor using automated high-frequency software program. As such, the one method round that is to carry out a extremely guide and cumbersome calculation course of.
As soon as the monetary yr has concluded – and also you’ve acquired your entire cryptocurrency income and losses merged right into a single portal – BearTax then lets you obtain your tax paperwork mechanically.
Alternatively – if you want to embrace your cryptocurrency good points with different areas of tax (equivalent to property tax or revenue tax), the platform lets you hyperlink your knowledge with third-party software program applications like TurboTax.
How Does BearTax Work?
The method of utilizing BearTax in your cryptocurrency tax wants is super-easy. Right here’s a breakdown of what you want to do.
Step 1: Create an Account
To get the ball rolling, you’ll want to go over to the BearTax homepage and create an account. It will require you to enter some private info, in addition to select a username and password.
Step 2: Join Cryptocurrency Exchanges
When you’ve acquired your account set-up, you may be required to attach your cryptocurrency trade accounts with BearTax. This can be a pretty easy course of, though the specifics can range from exchange-to-exchange.
Furthermore, you’ll have the choice of permitting BearTax to trace your trades mechanically, or you possibly can add the required knowledge as and once you select to.
If choosing the previous, you’ll need to hyperlink your cryptocurrency trade API with BearTax. You’ll sometimes discover this inside your trade account settings. When you’ve discovered it, copy the lengthy string of characters after which paste them into BearTax.
If choosing the guide course of, or your chosen trade doesn’t assist API integration, you’ll need to add a CSV doc into BearTax. You’ll get this by downloading it out of your cryptocurrency trade.
Step 3: Assess Your Earnings and Losses
Whether or not you determine to do that frequently – or solely when tax time comes round, BearTax lets you calculate your total income and losses for a pre-defined interval.
It can then present the required info so that you can file your taxes together with your respective authority.
What Exchanges is BearTax Appropriate With?
In impact, BearTax is appropriate with each cryptocurrency trade available in the market. Nonetheless, the particular reporting technique will depend upon the trade you’re utilizing. By way of using the API link-up or CVS add, that is supported by greater than 50 trade platforms.
This consists of the entire “big-boys”, equivalent to Binance, Coinbase, Bittrex, Gemini, Poloniex, Bitstamp, and Kucoin. This additionally consists of much less liquid exchanges like Lykke, Coinspot, and IDEX.
In case your chosen trade(s) shouldn’t be lined, BearTax gives a workaround. This centres on a generic CSV template that lets you add in your trades manually. When you do, BearTax will then carry out the required calculations. Nonetheless, this feature is extraordinarily time-consuming, so it’s finest to stay with one of many 50+ exchanges supported by BearTax.
What A lot Does BearTax Value?
BearTax is a paid-for service, which consists of 4 completely different pricing plans. Earlier than we offer a breakdown of what you get in your respective plan, it is very important be aware that you’re not required to pay upfront.
As a substitute, upon getting imported your entire transactions, you’re going to get to decide on a plan and make fee based mostly on the extensiveness of your trades.
For instance, in case you solely carried out 15 trades all through the monetary yr, you then would solely want the fundamental plan – which prices simply $1 per yr.
Fundamental Plan – $1 Per Yr
The fundamental plan – which prices a measly $1 per yr, lets you monitor and calculate as much as 20 transactions – which you are able to do throughout an infinite variety of exchanges. Actually, all 4 of the plans supplied by BearTax help you monitor an infinite variety of cryptocurrency exchanges, which is nice.
Intermediate Plan – $30 Per Yr
The intermediate plan will increase your annual allowance to 200 transactions per yr. Furthermore, you’ll even have entry to e mail assist – which the fundamental plan doesn’t permit.
Professional Plan – $100 Per Yr
At $100 per yr, the knowledgeable plan permits as much as 1,000 transactions per yr. Furthermore, assist is obtainable through dwell chat in real-time, versus having to attend for an e mail reply.
The knowledgeable plan additionally lets you merge a number of accounts on the similar trade (for instance if in case you have two accounts at BitMEX for the aim of automated buying and selling – which is completely superb).
Skilled Plan – $200 Per Yr
The most costly package deal supplied by BearTax is that of its $200 per yr skilled plan. You should have the capability to trace as much as 10,000 transactions per yr, and also you’ll additionally get precedence chat assist on a 24/7 foundation.
The skilled plan additionally lets you join your information together with your chosen accountant, in addition to import customized information.
Which International locations Does BearTax Assist?
On the time of writing, BearTax solely helps tax returns being reported within the following jurisdictions:
- Australia
- Canada
- India
- United States
The crew at BearTax is wanting so as to add extra international locations within the close to future – with Japan within the pipeline for 2020.
Essential Options Supplied by TaxBear
Right here’s a breakdown of among the principal options supplied by BearTax:
FIFO and LIFO Calculations
Whatever the particular tax class, it will be significant that you simply maintain your FIFO (First in First Out) and LIFO (Final in First Out) calculations constant.
Failure to take action can result in sanctions out of your respective tax authority. As such, BearTax lets you select whether or not you need to go for FIFO or LIFO, after which implement this on all future calculations.
Kind 8949
If you happen to’re based mostly within the US and also you’ve beforehand accomplished a tax return – you then’ll know the significance of Kind 8949. For these unaware, that is the shape used to report annual capital good points and losses. The excellent news is that BearTax lets you obtain your Kind 8949 with the entire required info.
This successfully removes hours of guide work that will have in any other case been required. Moreover, BearTax then lets you mechanically ahead the shape onto your accountant.
Audits
Do you know that the majority tax authorities around the globe have the authorized remit to audit your accounts years after they’ve been submitted? The IRS, for instance, quotes a post-submission audit interval of three years, albeit, it could go even additional if it feels it’s justified.
BearTax lets you present a full breakdown of any info that your respective tax company requires. For instance, if a selected transaction is being queried, you possibly can merely log in to your BearTax account and look at it in seconds.
Export to Account Software program
BearTax additionally lets you export your cryptocurrency tax obligations to exterior software program applications. This consists of the likes of TurboTax and TaxAct.
That is prone to be extremely useful in case your tax return consists of different areas of your monetary life – equivalent to revenue tax, property tax, or capital good points made in different asset lessons like shares.
Buy and Sale Worth
When the BearTax system undergoes the method of calculating your income and losses, it appears at various key variables. This consists of the quantity that you simply paid for the coin on the time of the acquisition, in addition to the quantity acquired once you offered it.
Furthermore, the TaxBear calculation additionally appears at whether or not the transaction is a short-term commerce (lower than 12 months) or a long-term commerce (12 months or extra). That is one thing that may impression the quantity you owe, so it’s notable that TaxBear has you lined.
Do I Must Pay Taxes on Cryptocurrency Earnings? If that’s the case, how A lot?
At the beginning, it is very important be aware that it’s best to at all times search skilled recommendation from a professional tax specialist – particularly in relation to a posh battleground like cryptocurrencies. With that mentioned, these of you based mostly within the US will all-but definitely have to pay taxes in your cryptocurrency good points within the following circumstances:
- You promote cryptocurrencies that have been acquired by way of mining
- You promote cryptocurrencies that bought from a third-party
- You utilize cryptocurrencies to provoke a transaction, of which the cryptocurrencies have been acquired by way of mining
- You utilize cryptocurrencies to provoke a transaction, of which the cryptocurrencies have been bought from a third-party
As you possibly can see from the above pointers supplied by Investopedia – you could be required to pay taxes even when your cryptocurrencies have been used to buy items and providers. This makes it extraordinarily tough to know the way a lot you owe.
Crucially, this isn’t one thing that BearTax will help with – not least as a result of it focuses solely on cryptocurrency income and losses made by way of buying and selling.
By way of the particular charges, it will depend upon various variables. For instance, if the transaction was based mostly on a purchase order and sale that each occurred inside a 12-month interval, you’ll have to revert to short-term capital good points taxes. Quite the opposite, if the cryptocurrency commerce was held over a interval of 12 months or extra, it would fall inside the long-term capital good points bracket.
BearTax Evaluate: The Verdict?
In abstract, BearTax lets you take away the extremely cumbersome activity of calculating your cryptocurrency income and losses. In doing so, you’ll then have the capability to report your annual good points in a seamless course of.
All you’re required to do is hyperlink your cryptocurrency exchanges with BearTax through a easy API, or alternatively, add your CSV file immediately into the platform. Both method, you’ll get a full breakdown of how a lot you’ll need to pay, subsequently saving you hours of guide work.
Even in case you have been to enroll to the skilled plan – which is barely required if you end up opening and shutting as much as 10,000 trades yearly, BearTax will solely set you again $200 per yr. This could possibly be the distinction between you getting your cryptocurrency tax returns submitted accurately – or as an alternative, receiving a demanding letter out of your native tax authority.
BearTax
Execs
- Import from 50+ exchanges through API and CSV
- FIFO and LIFO Calculations
- Kind 8949 Assist in USA
- Asks for Handbook Affirmation if Not sure
- Comparatively Simple to Use
Cons
- Tax Returns just for Australia, Canada, India, United States
