Koinly Review: Bitcoin Tax Software
Koinly is a software designed to help you calculate and file taxes related to Bitcoin. With its automatic syncing feature, it can easily track your transactions and calculate your capital gains and losses by connecting to various exchanges and wallets.
Koinly is bitcoin tax software that will assist you in calculating and filing your bitcoin taxes. It automatically syncs with several exchanges and wallets, making it simple to track transactions and calculate capital gains and losses. Koinly creates tax forms and reports that are in accordance with the tax laws of several nations, such as the United States, the United Kingdom, Australia, Canada, Germany, South Africa, and more.
Bitcoin tax refers to the taxes that you may owe on profits gained from purchasing, selling, or trading bitcoin. In numerous countries, bitcoin is regarded as property for tax purposes, and hence, any gains or losses are liable to capital gains taxes.
Reporting bitcoin gains or losses can be quite complex due to different tax treatments and regulations across different countries. It is crucial to comply with local tax laws and report gains or losses accurately. Platforms such as Koinly can be helpful in simplifying the process of calculating and reporting bitcoin gains or losses for tax purposes.
Koinly provides numerous features to make calculating and reporting bitcoin gains and losses for tax reasons easier. Among its significant features are:
- Automatic data import: Koinly supports automatic data import from over 300 bitcoin exchanges and wallets, allowing users to easily import all their Bitcoin transaction data.
- Real-time transaction tracking: Koinly offers real-time tracking of transactions, allowing you to see your bitcoin balances and gains or losses in real-time.
- Accurate tax calculations: Koinly uses various methods to accurately calculate taxes, including FIFO, LIFO, and specific identification. It also takes into account factors such as fees, margin trading, and staking rewards.
- Tax reporting: Koinly offers several tax reports, including capital gains reports, income reports, and donation reports. You can also generate tax forms such as Form 8949, Schedule D, and others.
- Portfolio tracking: Koinly provides a portfolio tracker that allows you to track your bitcoin holdings and their performance over time.
- Audit support: Koinly offers audit support, which can be helpful in the event of a tax audit.
How Koinly Works
Koinly works by connecting to various bitcoin exchanges and wallets to automatically import transaction data. You can also manually import data or enter transactions manually. Koinly then calculates the capital gains or losses based on your transaction history and the cost basis of your bitcoin holdings.
To get started with Koinly, use your Coinbase or Google account, or simply provide your name, email, and password. The best part is that you don’t need to input any credit card details to try out Koinly. After creating your account, you can connect an unlimited number of wallets and exchanges. Once the accounts are connected, Koinly automatically imports the transaction data and starts calculating the gains and losses. You can even add your accountant to your Koinly account for collaboration. It’s worth noting that Koinly does not follow KYC (Know Your Customer) requirements, which means you can maintain your privacy while using the platform.
On your dashboard, you can then view your portfolio and transaction history, including realized and unrealized gains or losses. Koinly also generates tax reports that you can use to file taxes with the relevant tax authorities. The reports include a detailed breakdown of the gains and losses, as well as any other relevant information needed to file taxes.
The free version of the platform provides an overview of your taxes, but it does not generate any reports unless you choose to upgrade to a paid plan.
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Supported Exchanges and Wallets
Koinly supports over 300 bitcoin exchanges and wallets. Here are some of the popular wallets and exchanges that Koinly supports:
- Trust Wallet
Koinly supports users from around the world, but tax reporting features are available only for certain countries. They include the following countries:
- United States
- United Kingdom
- New Zealand
- South Korea
- South Africa
Is Koinly Safe?
Koinly takes security and data privacy extremely seriously and implements a variety of safeguards to protect user data. To begin, Koinly protects your data with bank-grade security methods such as encryption, firewalls, and two-factor authentication. Furthermore, Koinly uses API keys to connect to exchanges and wallets securely and does not store user API keys on its servers.
Koinly also has rigorous data privacy standards in place and does not disclose or sell your data to third parties. The platform is GDPR-compliant, ensuring that your data is collected and processed in a lawful, transparent, and secure manner. Finally, Koinly allows you to export your transaction data at any time, giving you complete control over your data.
While Koinly is a popular and highly-rated platform for calculating bitcoin taxes, there are some potential disadvantages to consider:
- Cost: While Koinly offers a free plan, the more advanced features are only available on paid plans, and the cost can add up quickly if you have many transactions to report.
- Complexity: Koinly can be quite complex to set up and use, especially if you have multiple wallets and exchanges to connect. The platform requires you to enter your API keys or upload CSV files to import your transaction history, which can be time-consuming and may require some technical know-how.
- Accuracy: While Koinly is generally accurate in its calculations, there is always a risk of error or miscalculation, especially if you manually enter transaction data or import incomplete data. It’s important to review your tax reports carefully and consult with a tax professional if you have any doubts about the accuracy of your calculations.
- Limited tax reporting for some countries: While Koinly supports users from around the world, tax reporting features are available only for certain countries. If your country is not on the list of supported countries, you may need to use the generic tax report or consult with a tax professional for specific advice related to your situation.
There are several alternatives to Koinly for calculating bitcoin taxes. Some popular alternatives include:
- CoinTracking: a platform similar to Koinly that allows you to import transaction data from multiple exchanges and wallets, and calculates gains or losses for tax purposes. It also offers features such as portfolio tracking, tax reports, and trading analysis.
- ZenLedger: it helps you calculate taxes on bitcoin gains and offers features such as transaction reconciliation, capital gains reports, and audit support.
- CryptoTrader.Tax: a bitcoin tax platform that offers features such as cost basis tracking, tax optimization, and automated tax form generation.
- Bitcoin.Tax: it is a platform that enables you to calculate bitcoin taxes with features such as transaction tracking, capital gains reports, and tax form generation.
The tax treatment of bitcoin varies depending on several factors, such as the duration of the investment, the amount of gains or losses, and the investor’s location. In the US, for instance, long-term capital gains tax rates (gains on investments held for over a year) range from 0% to 20% based on the investor’s income level.
It’s important to keep accurate records of all bitcoin transactions, including the date of purchase or sale, the amount of bitcoin involved, and the price at the time of the transaction. This information will be necessary for calculating gains or losses and completing tax forms. Using a platform like Koinly can simplify the process of calculating and reporting bitcoin gains or losses for tax purposes.
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