Combining Multiple Crypto Tax Software Together
Crypto tax is painful - especially when you're not using the best tool for the job. Follow our complete guide on combining multiple crypto tax software together.
Combining multiple crypto tax software methods
The method to follow to combine or switch crypto tax software very much depends on the information you’re trying to combine and the end goal, so we’ll cover a few different common scenarios we see from users.
Combining information from exchange tax calculators
Some crypto exchanges - like Binance - offer their own crypto tax calculator service. However, these exchange tax calculators are often limited only to the platform itself - for example, Binance Tax only calculators transactions made on Binance. While a select few allow users to import CSV files from a limited number of other crypto exchanges.
This presents a couple of issues when it comes to accurately calculating your gains, losses, and income. First, you need to do this for every single exchange and wallet you’ve used. So if your exchange tax calculator offers only calculations for its platform or limited support, you’ll still end up having to use other crypto tax software regardless.
As well as this, depending on your transactions, the numbers produced by your exchange tax calculator may be incorrect. For example, if you transferred crypto from your wallet or another exchange into Binance, Binance is unable to know your original cost basis. This means when it generates tax reports, it’s not using the correct figures to do so, meaning you may end up paying too much tax or not enough tax.
The only time an exchange tax calculator may be suitable is when you’ve only used that exchange, with no transfers of crypto to that exchange. Otherwise, you’re better off using crypto tax software to complete all the calculations you need as this software is able to track cost basis because it has an overview of all your transactions - across platforms.
However, some platforms create particular issues - generally, ones that offer investments outside of crypto.
Combining information from multi-asset exchanges
Some platforms offer investments beyond just crypto - for example, Robinhood, eToro, and Revolut. The way to deal with these platforms very much depends on your investments and the specific platforms.
In some instances, like with Revolut, these offer easy integration with crypto tax software, so if you’ve got other crypto transactions or only crypto investments, using crypto tax software is still likely your best bet to get the job done easily. Similarly, platforms like eToro offer CSV exports for crypto transactions which can easily be uploaded to crypto tax software, alongside your other crypto transaction history from other platforms.
But the clue is in the name - crypto tax software only deals with the tax calculations for crypto assets. So if you’ve been investing in other assets like stocks, ETFs, commodities, and so on, then you’ll need to deal with the calculations for these investments separately.
Finally, in some specific instances, some platforms simply don’t play well with crypto tax software. This is usually where the platform doesn’t offer any API integration or CSV export. In these instances, provided you’ve not transferred crypto on and off of these platforms (creating cost basis issues) you’re better off handling these calculations entirely separately. Alternatively, you can create custom CSV files to upload to your chosen crypto tax platform.
Combining information from tax preparation software
Thanks to a lackadaisical IRS and lobbying, the vast majority of US residents are using tax preparation software of some kind to file their annual tax returns, whether that’s TurboTax, TaxAct, H&R Block, or another service entirely.
Some of these tax preparation platforms claim to support crypto. So why can’t you just file using them? Well, it very much depends on the tax preparation software you’re using and your transactions. Some platforms - like TurboTax - do offer some support for crypto. But that support is largely limited to automatic support for only a couple of the largest crypto exchanges and CSV support for some other crypto exchanges. The kicker? In many instances, the CSV file that your exchange exports isn’t usually supported by TurboTax anyway, so you’ll need to manually edit it into TurboTax’s format.
So while TurboTax claims support for crypto, the reality is it’s not going to do the job for most crypto investors. Though it is still ahead of other tax preparation platforms that require you to enter your crypto transactions manually.
Fortunately, combining information from your crypto tax software and your tax preparation tool is usually easy. Most crypto tax calculators can generate reports for tax preparation software like TurboTax and TaxAct, as well as generate Schedule D and Form 8949 for other tax preparation software that looks for a more generic file format.
Read next: How to do TurboTax crypto taxes
Combining information from different crypto tax calculators
Finally, what about combining information from multiple crypto tax software platforms?
In some instances, you might be using crypto tax software that doesn’t support all of the exchanges or blockchains you use (Koinly supports more integrations than any other crypto tax calculator, just FYI). So you’re thinking about using two tools to get all of the information you need.
Well, in general, we wouldn’t recommend it because crypto tax calculators can produce very different results.
Why do different crypto tax platforms produce different results?
Not every crypto tax calculator works in the same way, so in many instances, if you’ve taken the time to import your data into multiple crypto tax to compare the results, you’ll probably notice that the numbers can be drastically different. This can be for a variety of reasons, including:
Market prices: Different platforms use different data aggregators for market prices for cryptocurrencies - like CoinMarketCap or CoinGecko. While this shouldn’t create huge discrepancies, the small differences can add up if you have a lot of transactions.
Accuracy of API imported data: Each platform may import different data automatically (via API). Some have superior API integrations than others where more data is imported, while others may be missing transaction data.
Transaction merging: Platforms may merge transactions differently, particularly in the case of DeFi, so you may end up with a different number of transactions imported. In some instances, automatic transaction merging can cause a lot of problems for DeFi investors if the profit for a given protocol isn’t being handled accurately - for example, handling new reward tokens as a capital gain instead of income.
How fees are handled: Each calculator may handle transaction fees differently. For example, Koinly includes trading fees in the cost basis calculators, but other calculators may handle them differently or even need them added manually.
Transaction tagging: Tax calculators have varied support for automatic tagging of transactions - like rewards from staking or mining. Some platforms handle most of this automatically, while others require you to go through each transaction and manually tag and categorize them. This means you may end up with very different initial figures, particularly for transactions that generate income.
Cost basis methods: In countries where investors can use multiple cost basis methods, you’ll need to check the settings of your crypto tax calculator to see what options are available. These methods can have a huge impact on your final calculations. As well as this, wallet-based cost tracking may significantly impact calculations. You should also check whether your crypto tax platform is accounting for specific rules in countries. For example, Canada’s Superficial loss rule disallows many losses in a given time period. Koinly factors this in, but if your chosen software isn’t considering this, you may be generating inaccurate calculations.
How to switch crypto tax software
Switching crypto tax software is easy. All you need to do is export your information from one platform and import it to another. We’ve got step-by-step on how to do just that for all the leading crypto tax calculators, including:
Please note, that due to limitations from CSV files, in some instances, like when Koinly offers superior API support, it’s better to import your data from scratch.
Read next: Compare Crypto Tax Tools
FAQs
Why can’t I just use a 1099 form from my exchange?
In short, because your 1099 is unlikely to include all the information you need to file your taxes. Most exchanges don’t issue 1099-B forms anymore because of the issues around cost basis usually being incorrect, while your 1099-MISC form only covers income from crypto, not capital gains or losses. We cover everything you need to know in our crypto 1099 form guide, as well as our 1099-DA guide.
