Cryptocurrency Tax Reporting Software That Generally Works (but Often Requires Some Effort)
Cointracking.info is cryptocurrency tax software that helps you keep track of your profits and losses for your own records and for tax reporting. We explain and review Cointracking.info.
There are a few important things to note about the Cointracking software before we get started:
- Cointracking can grab all your trades, deposits, withdrawals, from almost every wallet and exchange.
- You can use API access to automatically enter trades, import CSV files from exchanges, or manually enter and edit trades (so if it gets something wrong, you can address it by hand).
- Make sure to give the proper API access to all exchanges you use. This will allow you to have records of all your crypto, not just some of it. You don’t need to allow anything other than “view” access (in other words, you don’t need to trade, withdraw, manage, etc).
- Don’t expect everything to work perfectly out of the box. The chances you’ll need to edit your coins by hand is high, see READ FIRST: General account imbalances. There are a number of issues that you can run up against (where it seems like the more you traded and the more you moved funds around, the more issues you have the potential to run up against). The value of Cointracking isn’t in it doing everything for you, it is in its ability to calculate dollar amounts and help you organize. If you are looking for a perfect solution, I don’t think there is one. You have to go into using this software with your expectations set correctly.
- Since you can expect problems, you should check everything against your own records and still use an accountant (I would be weary of filing based on on Cointracking or another software unless I meticulously kept records in Cointracking throughout the year). Cointracking does not replace the need for preparing your taxes or hiring a CPA in most cases. It is more like a bridge between the data the exchanges have and you preparing your taxes; it is a tool to help you, not a magic bullet.
- Problems aside, Cointracking can be a Godsend when it comes to reporting crypto-to-crypto trades at tax time (especially if you didn’t do a lot of trades). It organizes your trades and gives you dollar values, and that alone is invaluable.
- You’ll need to get the premium version if you did a lot of trades (if you traded a lot, consider getting the unlimited 1 year, which is about $150).
- You can sign up for free and try out most of the features, or you can subscribe and try out all the features. That said, if you use our affiliate link to create your account, you’ll get 10% off if and when you do subscribe: our Cointracking.info affiliate link 😀 (note: we recommend products we use and think are the top tier in crypto, true for Coinbase, TREZOR, Cointracking, and other products on our site we have affiliate programs for).
That said, Cointracking isn’t going to work for all traders:
If you traded a lot and especially if you also moved a lot of funds around, Cointracking can end up being close to unusable. This is because you’ll almost always need to make some edits by hand, and that will mean double checking every withdrawal, deposit, and trade. If you are having to go through every trade by hand, at a point you may end up having more luck with your own records. So just to make sure expectations are set here, I would submit that some will find the product unusable.
So we have a multi-edged sword here:
- We have software that is ultra useful and worth every penny in many case, especially if you traded any amount crypto that is hard to account for by hand.
- However, we have software that won’t just magically work in many instances and can result in problems that require some serious detective work to address. The problems can be frustrating, but then again, doing this by hand is even more frustrating (this is a point that I really want to hammer home here).
- And, the amount of work it can require can make the software almost unusable for some traders with complex histories of moving coins around and making trades.
- Thus, since it will tend to have major problems, you shouldn’t make this your final line of defense between you and the IRS unless you have been very tedious in your record keeping.
Thus in short, I highly recommend everyone struggling with crypto taxes check out Cointracking, but realistically some people will better spend their time looking for professional tax assistance.
From what I can tell, the problems tend to revolve around this: Cointracking seems to have problems dealing with coins moved around from exchange to exchange and from wallets to exchanges. The problem I immediately had was shifting through a year of trades on different exchanges and from different wallets was trying to figure out where things went wrong. I was very sure the end result was wrong, but which of the many trades I made were the problem? I had no clue, I had no simple way to find out, and that meant doing the thing that was a problem in the first place… going line-by-line through trades. Worse, I had to compare Cointracking to my original records, so it actually took longer to do this step than not!
Is There a Better Option?
With the above said, from what I understand this problem is common across all the crypto tax software. Coinbase’s tax tool has this problem, Cointracking has this problem, and from reviews I read the other major solutions have this problem.
Since the problem isn’t specific to Cointracking, I can recommend Cointracking as long as the noted problems are something you understand up front… and I actually don’t have any suggests to recommend for alternatives aside from finding a tax professional willing to do your crypto taxes or doing them the old fashioned way without software.
In fact, I’d go as far to say this: Until better software comes out, anyone who did a lot of trades should also have Cointracking running with “view” API access on every exchange they trade on (and every wallet they use). From there, they should take care to edit their trades during the year to ensure all the info is correct (like a daily or weekly review to ensure everything is on track). Then, at the end of the year, if one does this, they will have impeccable records for reporting (which is priceless for a crypto trader). And, even if it doesn’t work, if you traded enough, it probably still justified the cost of the software (plus you have some solid record keeping if you get audited).
Although running this software year round is clearly the best way to do it, I also recommend using it for the end of year. Yes, you almost certainly will run into issues, and in some cases people may just give up and use another method, but for most people their Cointracking issues won’t be anything compared to the issues they will have trying to figure out fair USD value for every crypto-to-crypto trade done in a year (essentially a near impossible task without software due to price variations, time constraints, and limits of the human psyche).
Long story short, doing your crypto reporting by hand isn’t an option for many of us, your accountant is going to fire you if you drop the raw Binance CSV on their desk, and thus one must look to software for reporting crypto gains and losses. Of that software, Cointracking seems to be on par with the best bets…. even if the end result still leaves some traders without a perfect solution.
I plan to review more software for this site, but for now, clock is ticking on taxes and Cointracking is somewhere between acceptable and one the best choices you have.
TIP: If you have a trade history that is so complicated that Cointracking.info doesn’t work for you, there is a high chance that finding that out will be money well spent and that you should be working with a tax professional anyways.
NOTE: The vibe of the site comes off as a site that has taken real care to present the best product they can. All my issues with this product are isolated to the ones noted above, otherwise I really dig Cointracking.
Sign up for Cointracking: To restate the above, you can sign up for free and try out most of the features, or you can subscribe and try out all the features. That said, if you use our affiliate link to create your account, you’ll get 10% off if and when you do subscribe: our Cointracking.info affiliate link. 😀