Cryptocurrency-focused tax software CryptoTrader.Tax integrated its software with American tax software Intuit TurboTax platform to make it easier for consumers to calculate crypto-trading gains and losses and for easy tax filing.
As per the Internal Revenue Service (IRS) guidelines for reporting digital asset gains, virtual currency is treated as property for U.S. federal tax purposes. General tax principles applicable to property transactions apply to transactions using virtual currency.
The consumer is required to report capital gains and losses from their crypto trades in their tax filing. The software integration comes ahead of the April 15 deadline for filing taxes in the U.S.
Cryptocurrency users or traders can now import their crypto trades into the TurboTax platform. The software will automatically crunch the consumers' capital gains and losses numbers and generate the necessary tax documents including the IRS form 8949.
The CryptoTrader.Tax software automates the entire cumbersome process of calculating the amount of gain or loss incurred for every cryptocurrency transaction to arrive at the tax calculation. It uses the same First-In-First-Out method that is used by Certified Public Accountants.
It is near impossible to manually remember or note the fair market value in US dollar of the coin at the time of each trade to calculate the gain or loss.
In late January, U.S.-based Cryptocurrency exchange Coinbase also had integrated TurboTax Premier to enable its clients to import all transactions from Coinbase to TurboTax.
Recently, accounting services firm Ernst & Young LLP (EY) rolled out a tool for clients in the U.S. for calculating the tax payable on cryptocurrency holdings and transactions executed by them.
The Crypto-Asset Accounting and Tax (CAAT) tool connects with multiple cryptocurrency exchanges and wallets, allowing better visibility into cryptocurrency transactions and inventory.
It sources and consolidates transaction-level information from virtually all major exchanges and prepares the IRS tax returns related to crypto-assets.
For comments and feedback: editorial@rttnews.com