TokenTax Evaluation 2023 | The School Investor

TokenTax is a crypto-first tax submitting firm. The corporate makes a speciality of crypto tax optimization and has a stand-alone product that calculates the taxes due on crypto transactions.

Along with the stand-alone product, the corporate presents full-service submitting, together with back-tax submitting for crypto merchants who’ve inaccurate information going again to 2014.

When you have a sophisticated crypto tax state of affairs, TokenTax could also be precious to you. Right here’s what it’s essential learn about it.

TokenTax is a tax-filing firm that gives tax-filing providers in 18 international locations, together with america. Based in 2017, the corporate offers each full-service submitting and a standalone software that calculates taxes for crypto transactions.

As a tax-first firm, TokenTax makes a speciality of tax minimization methods, together with tax-loss harvesting. It additionally makes use of IRS-compliant logic associated to margin buying and selling and different facets of crypto buying and selling.

Customers who choose to make use of TokenTax can generate Type 8949 for cryptocurrency. Or they will have TokenTax file their full return for them.

In 2022, we named TokenTax Greatest Full Service crypto tax software program on our annual record of one of the best crypto and NFT tax software program, and it stays a best choice in 2023.

Some Crypto Tax Fundamentals

It is essential to grasp how the IRS treats crypto and taxes.

Principally, crypto tokens and NFT are handled like securities or shares. If you purchase or earn a token, that token has a price foundation which is the worth of the token (in $USD) on the time of buy. Similar to shares, folks have capital good points and losses after they promote or commerce the tokens.

The revenue or loss depends upon the worth of the token on the time you promote it.

 Crypto tokens are additionally eligible for tax-loss harvesting. Which means you should use realized capital losses (from promoting tokens which have depreciated) to offset some or your whole realized capital good points.

For many merchants, their crypto transactions will likely be taxed as investments within the methods described above. Nonetheless, notice that there are additionally instances when cryptocurrency might be taxed as abnormal revenue. Examples embody when you acquired crypto for mining or staking or as curiosity on a mortgage.

TokenTax doesn’t provide any free model. Customers should pay for a selected tax 12 months earlier than they will begin utilizing the service.

The bottom price plan will set you again $65 per tax 12 months. Greater-end plans price $199 to $3,499 per 12 months.

It’s been a gradual 12 months within the cryptocurrency markets and never surprisingly, TokenTax hasn’t made many massive modifications or updates to its software program.

TokenTax software program will ease tax submitting for crypto merchants. The software program mechanically calculates capital good points and losses and recommends tax-loss harvesting choices. This enables merchants to learn from tax minimization methods with out all the trouble.

DIY tax filers who use TurboTax will likely be glad to be taught that TokenTax integrates instantly with the tax submitting software program. And in contrast to almost all of its opponents, TokenTax additionally has a CPA and an entire tax submitting crew out there for rent.

TokenTax’s tax specialists can file your taxes in your behalf and supply white glove service when you need assistance piecing previous good points and losses collectively primarily based on defunct exchanges. Whereas costly, it is a service that almost all accountants merely don’t provide.

You’ll pay a fairly penny for the very best degree of service, however that’s worthwhile for some rich merchants with advanced portfolios or buying and selling methods.

TokenTax will file your entire return or create stories so that you can file by yourself. These are among the important options.

TokenTax says it is the “solely cryptocurrency tax calculator that connects to each crypto alternate.” Dozens of exchanges, together with those proven under might be related instantly through API.

Nonetheless, even when an API integration is not out there, TokenTax can nonetheless import your commerce information. All it’s a must to do is add a CSV file out of your alternate. If TokenTax’s software program cannot mechanically course of the report, its human employees members will personally maintain including the trades to your account.

TokenTax works to attenuate customers’ tax burden by creating alternatives for tax-loss harvesting (the place authorized). This focus permits merchants to benefit from some instances when buying and selling didn’t work out.

TokenTax helps margin buying and selling and presents API integrations to most exchanges that assist margin buying and selling. Customers unlock some margin buying and selling assist on the Premium degree however could must improve to Professional, relying on the exchanges they use.

TokenTax presents a wonderful consumer expertise, and it presents options for crypto merchants utilizing subtle strategies (like margin buying and selling). Nonetheless, the software program isn’t good. These are a couple of drawbacks.

TokenTax doesn’t provide a free trial. To begin utilizing the software program, it’s essential pay. With super-high costs, this is usually a waste of cash if the software program doesn’t do what a consumer wants it to do.

TokenTax doesn’t universally unlock API integrations. The most typical exchanges are unlocked on the Premium degree, however others usually are not unlocked till the VIP tier.

TokenTax has a aggressive $65 pricing tier (although it solely helps Coinbase), however costs improve steeply after that. Customers who wish to entry all margin exchanges through API should pay for the Premium tier, which is $199 per tax 12 months.

Relying on what number of transactions you have completed, you possibly can rapidly end up within the $199 tier. 

For extra sophisticated taxes, additionally they have their highest tier providing, which begins at $3,499 per 12 months.

TokenTax costs charges primarily based on a number of elements. Every tier unlocks extra trades, extra API connections to exchanges, and completely different tax minimization methods. The VIP degree contains consultations with crypto tax specialists who may help work out tough points associated to defunct exchanges.

TokenTax is without doubt one of the solely crypto tax prep corporations that may provide full service if wanted. That stated, the VIP pricing tier (which incorporates hands-on assist) could be very costly. Tax submitting itself requires a customized quote. Due to the excessive costs, nearly all tax filers will go for TokenTax’s cheaper choices.

Buyer evaluations of TokenTax on Trustpilot have been overwhelmingly optimistic, which is an encouraging signal. The corporate at the moment has a 4.3/5 (Glorious) Trustpilot score with simply over 100 evaluations.

General, TokenTax presents an awesome product, however it’s not competitively priced. Though TokenTax closely advertises that it helps margin buying and selling, it is not the one firm that helps this. In 2023, most crypto merchants ought to go on TokenTax. Merchants can discover related crypto tax submitting software program at lower cost factors.

Let’s reply a couple of of the most typical questions that folks ask about TokenTax:

Can TokenTax assist me file my crypto investments?

Sure, TokenTax may help tax filers full their taxes. The corporate can file your total return in your behalf.

Can TokenTax steal my crypto?

No, TokenTax makes use of read-only APIs to get info out of your pockets or the exchanges you employ. It can not steal your info.

Do I must report my crypto pockets switch information to the IRS?

It relies upon. Whereas shifting cryptocurrencies between wallets is just not a taxable occasion, sure occasions that tax place inside your pockets could possibly be taxable, akin to incomes curiosity, receiving staking rewards, or receiving crypto as fee for providers rendered.

Can worldwide merchants use TokenTax?

Sure, TokenTax says that its stories can work for any nation and might present leads to no matter foreign money you select.