Five Reasons Why Koinly Is the Best Crypto Tax Software
Koinly is a leading a cryptocurrency tax calculator and portfolio tracker for traders, investors and accountants. There are many features that make it stand out from the competition, and this article will present five key reasons why Koinly is actually the best crypto tax software in the world today. These include a wide range of exchange and wallet integrations, DeFi support, Cardano support, support for liquidity transactions, and compatibility with multiple countries.
Wide Range of Integrations
Whether someone is a taxpayer looking to get an accurate crypto tax report, a business looking to track their inventory or an accountant trying to work through a maze of transactions, Koinly is the go-to software. It is a crypto tax calculator that makes doing taxes enjoyable. It comes with a hoard of features and integrations that will make it extremely easy and convenient to satisfy all crypto tax needs.
With Koinly, one can easily track crypto assets and taxes over time across all wallets & blockchains and exchanges. Viewing total holdings and portfolio growth over time in one place has never been more accessible. See Actual ROI and invested fiat, income overview, and preview profit/loss & capital gains for free. Aside from that, generate tax documents whenever required. Koinly’s tax calculator can help with tax returns and filing reports and it does so in compliance with the tax regulations of a person’s country. If someone is in the USA, Koinly generates filled-in IRS tax forms. The calculator also has international support for people living in Canada, the UK, Germany, and several other countries. Koinly also allows taxpayers to easily export transactions to other tax software like TurboTax and TaxAct.
Say goodbye to inaccurate tax reports or absurd gains; with Koinly, a person can look at their transactions to help with finding any problems, thanks to numerous tools. There is a double-entry ledger system – every change into a person’s asset balances is backed by an entry, making it easy to debug. An auto-import verification tool also automatically checks wallets via API to ensure all the imported data is correct. Aside from this, Koinly also highlights errors due to incorrectly imported or missing transactions that result in balances going below zero and skips duplicate transactions whether the import is via API or CSV files. There is no need to track what has been imported and what is new.
Most importantly, have all the transactions in one place, thanks to Koinly’s integration with 350+ exchanges (like Binance, Coinbase and AscendEx), 50 wallets (like Ledger, Trezor and Metamask) and 11 services (like Nexo, BlockFi and Paxful). No more going back and forth between different platforms. Easily sync data to Koinly and get a complete picture of all trading activity.
Koinly can also automatically import all trades and liquidity transactions from Uniswap, Sushiswap, Cream, Value, Balancer, PancakeSwap and many other DeFi platforms when a user creates a new ETH, BSC or Polygon wallet. With tax authorities cracking down on crypto investors worldwide, it is crucial to understand what DeFi is and what are the tax implications of DeFi investments. DeFi is not just one concept. It is an all-encompassing term for various financial applications built using blockchain technology or cryptocurrency. DeFi protocols are autonomous programs (smart contracts) created to execute specific functions.
DeFi protocols help to tackle problems existing in the traditional financial sector. For example, if someone wants a loan with a traditional bank, they will typically need to provide identification, proof of income, proof of where they live and fill out many forms. Nevertheless, with DeFi, all someone needs to do is deposit an asset into a given protocol that will automatically do it. The protocol dictates the terms, conditions, and rules. If someone cannot make payments back, the protocol will liquidate the contract; this is just one example of a DeFi protocol out of the hundreds that exist. A user can do anything through a centralized crypto exchange with DeFi protocols, including:
Send money to anyone, anywhere
Stream money worldwide
Start a savings account
Exchange fiat currency, coins, and tokens
Manage and grow a financial portfolio
Borrow funds with or without collateral
Derivatives, margin and leveraged trading
Loan own funds to earn interest or rewards
Access and invest in stable currencies
Crowdfund new DeFi platforms, services, and apps
Bet on the outcome of current events
Even though tax offices have not yet issued exact guidelines on DeFi taxes, they have given clear guidance on crypto taxation. Since cryptocurrencies are considered assets for taxation purposes, they are always taxed in one of two ways – income tax & capital gains tax; depending on whether someone’s crypto investment is seen as a regular income or as regular income disposal of an asset. What kind of tax applies to someone’s investment can be challenging for many to understand, so crypto tax calculator software like Koinly makes it more accessible.
Koinly crypto tax software calculates all crypto taxes for individuals, including DeFi taxes. Someone needs to sync the wallets and exchanges to use with Koinly through API or import a CSV file of their crypto transactions. Koinly will identify different crypto transactions and apply the relevant taxes. The data should be labeled automatically, but if it is not, a user can tag DeFi transactions as loan interest, an interest payment received from the pool, as sent to the pool, or as a reward.
In addition to over 17000+ cryptocurrencies and 50 different blockchains that Koinly supports, it also can also help with your Cardano (ADA) taxes with staking on wallets such as Yoroi and Daedalus. Cardano is the blockchain platform based on proof-of-stake that was founded in 2015 by Ethereum co-founder Charles Hoskinson.
Koinly Supports Liquidity Transactions
The term liquidity is generally used in financial markets to describe the ease by which an asset can be converted into cash without difficulty. In terms of cryptocurrencies, liquidity is the ability of a coin to be easily converted into cash or other crypto coins. Liquidity transactions are done every day since liquidity is essential for any tradeable asset. There is a considerable debate over whether liquidity transactions are taxable or not. Koinly currently supports liquidity transactions on the Ethereum, Binance Smart Chain and Polygon blockchains. Liquidity transactions are imported and tagged as Liquidity in/out automatically. It also currently supports several liquidity protocols such as:
Balancer Pool, Uniswap, Sushiswap, Sakeswap, Snowswap, Mooniswap, Curve.fi, Bancor, yearn Finance, PancakeSwap, Value, Cream, STM Network, APY Finance, Pancake, 1inch; with the list ever-increasing.
By default, Koinly treats liquidity transactions as taxable since use is exchanging tokens for an LP token that can be traded or staked to earn more coins. However, if someone feels that such liquidity transactions should not be taxed, then Koinly has the functionality to turn it off on the settings page, ‘Realize gains on liquidity transactions’.
Koinly Supports Over 100 Countries
Koinly is a good option for international tax reports, over many other tax software, because it supports over 100 countries. It is available in different countries like:
Koinly prepares localized versions of tax reports when someone changes their home country, so it does more than just changing some currency figures. For example, if a person moves from the USA to Australia and selects it as their home country, Koinly automatically has additional tax report options suited for that country.
To learn more about crypto taxes in 2022 check out Koinly today.
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