Let’s face it - the IRS doesn’t exactly make things easy when it comes to filing your annual tax return. That’s why most US taxpayers opt to use a tax platform or software to simplify their tax reporting. But can your go-to tax app handle your crypto taxes?
Best tax apps for crypto taxes
Nobody wants to spend hours filling out paper forms anymore - but that’s the only official route available if you want to file your taxes directly with the IRS. To further complicate things, if you’ve got crypto investments to report, you'll need to fill out even more IRS forms.
You need to report all your crypto disposals (anytime you’ve sold, spent or traded crypto) on Form 8949.
You need to report your net capital gains and losses from crypto on Form Schedule D 1040.
You need to report any crypto income (from airdrops, forks, mining etc.) on Form Schedule 1 1040or on Form Schedule C 1040 if you’re self-employed.
You need to complete Form 1040 (Individual Tax Return) by reporting your net capital gain or loss on line 7, your crypto income on line 8 and by answering yes to the question "at any time during 2021, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
Form 8949 alone is hours of work for many crypto investors if you’ve got a lot of sales or trades. Similarly, if you’re receiving crypto income from various sources like crypto mining, DeFi protocols and more, then calculating and tallying up your crypto income is a pain.
Koinly makes this simple. It can generate a pre-filled Form 8949 and Schedule D - saving you hours of work. It can also generate a Schedule 1 Form to report your crypto income.
You can then upload these files to a tax app to get your taxes - including your crypto taxes - reported in minutes. Koinly can also generate specific reports for a variety of popular tax apps to make this process even faster.
Let’s dive into the best tax apps to get your crypto taxes done (with Koinly) in mere moments.
TurboTax for crypto tax
TurboTax is the most popular tax app in the US. It offers a great user experience and walks you through filing your taxes step-by-step. They also offer professional tax help as and when you need it, though this comes with an additional cost.
The basic product starts from $60 and goes all the way up to $200. All the TurboTax products are available online, or if you prefer you can grab it in a CD format.
Koinly can generate specific TurboTax reports - so doing your crypto taxes with Koinly and TurboTax couldn’t be easier. You can see our full article on how to do your crypto taxes with TurboTax, or watch the video below and follow our summarized steps.
Set up yourKoinly account by syncing all your wallets and downloading the TurboTax Online tax report.
Get the TurboTax Premier Plan and fill out your personal information for your TurboTax account.
Report your crypto capital gains in TurboTax under investments and savings -> stocks, cryptocurrency, mutual funds, bonds and other. You'll upload your Koinly TurboTax Online Report here.
Report any crypto income in TurboTax under less common income -> miscellaneous income.
Report any crypto related expenses under other deductible expenses. You may also be able to deduct your crypto tax preparation fees too.
Head to the review section in your TurboTax account, skip the option to review each trade (unless you have the time!) and you're done!
TaxAct for crypto tax
TaxAct is another great tax app with a slightly lower pricing tier than TurboTax. Prices start from $24.95 and they also offer professional live support for an additional cost. TaxAct also has a free product, but you’ll still have to pay a fee for state tax returns.
Like with TurboTax, Koinly can generate IRS forms that you can simply upload to TaxAct to get your crypto taxes done in minutes. You can see our full article on how to do your crypto taxes with TaxAct, watch the video below or follow our summarized steps.
Sync all the wallets, exchanges and blockchains you use with Koinly.
Head to the tax reports page in Koinly and scroll down to download the Form 8949 and Schedule D. These forms are pre-filled and contain all your crypto disposals and your net capital gains and losses for the financial year.
Now log into your TaxAct account and head to capital gains and losses.
On the Form 8949 Summary page, follow the instructions to add your Form 8949 attachment.
Then head to other income, then summary and select add schedule 1 form 1040 other income. Work through the other section until you get to miscellaneous income. Then add your totals from your Koinly Schedule D report.