When tax season arrives, crypto enthusiasts often feel the stress of organizing numerous transactions across different platforms. If you have accounts on several exchanges, using a single crypto tax software might feel limiting. But what if you could combine multiple crypto tax softwares together to streamline the entire process? In this article, we’re diving into the benefits and steps of doing just that, and how you can make crypto tax reporting as smooth as possible.
Introduction: The Challenges of Crypto Taxes
Cryptocurrency taxes are a unique kind of headache. With many exchanges, wallets, and different types of transactions (like staking, DeFi, or NFTs), managing all that data with just one tax software can be a nightmare. This is why combining multiple crypto tax softwares together can be a game changer. It allows you to integrate data from various sources seamlessly, making the calculation of your gains, losses, and overall tax situation much easier.
In this guide, we’ll show you why combining tax software makes sense, how you can go about it, and which tools work well together. By the end, you’ll feel ready to tackle your crypto tax obligations with confidence.
Why Consider Combining Multiple Crypto Tax Softwares?
When you use only one crypto tax software, you may encounter several limitations:
- Data Limitations: One software might not support all the exchanges or wallets you use. You could miss out on importing certain transactions automatically.
- Feature Gaps: Some tax softwares specialize in different areas, like supporting DeFi or NFT transactions. No single software may cover everything perfectly.
- More Accurate Results: Combining tools helps eliminate data discrepancies. One software can cross-check information gathered by another, leading to more precise tax reports.
Combining multiple crypto tax softwares gives you a broader spectrum of support, ensuring every transaction is accounted for, whether it’s trading, staking, or yield farming. This can result in more accurate tax calculations and ultimately fewer headaches when you submit your taxes.
How to Combine Multiple Crypto Tax Softwares Together
If you’ve decided that combining tax softwares is the right route for you, here’s a step-by-step guide on how to do it effectively:
1. Identify Your Needs
Start by listing your crypto activities. Do you trade on multiple exchanges? Are you involved in staking, yield farming, or NFTs? Understand what your needs are, so you can select softwares that complement each other.
2. Choose Compatible Softwares
Not all crypto tax softwares integrate seamlessly. To combine them effectively, choose ones that allow data export and import through common formats like CSV or API integration. Some popular tools that often work well together are:
- CoinTracking: Great for importing data from a range of exchanges and providing insightful tax reports.
- Koinly: Excellent for those dealing with DeFi and staking. Koinly allows easy CSV exports, which you can then import into another software.
- CryptoTrader.Tax: Another software known for its simplicity and compatibility.
You can use CoinTracking to gather most of your trading activity and pair it with Koinly for specialized DeFi transaction management.
3. Sync and Import Data
Once you have your selected tax softwares, begin by importing data from your wallets and exchanges into each software. Here’s how you do it:
- Export CSV Files: Most crypto tax softwares allow you to export your data in CSV format. Export from one software and import it into the other.
- API Integration: Alternatively, use API keys to link your exchanges with both softwares. This method can ensure that your data stays updated in real-time.
4. Cross-Check and Verify
After you have your data imported, cross-check the information in both softwares. The idea is to catch any discrepancies – for example, if one software failed to categorize a specific transaction correctly, the other might pick it up.
5. Generate Reports
With the combined data, generate your tax reports. Most crypto tax softwares provide a preview of gains, losses, and taxable income. By having multiple softwares, you can compare the reports for accuracy, ensuring that every cent is accounted for.
Benefits of Combining Crypto Tax Softwares
Combining multiple crypto tax softwares has its perks, and here are some of the most noteworthy benefits:
- Comprehensive Coverage: Each tax software has strengths and weaknesses. By combining them, you’re covering more ground and reducing the risk of missing anything.
- Better Audit Defense: If you get audited, having reports from multiple reliable sources can help prove the accuracy of your tax filings.
- Increased Peace of Mind: Knowing that you’ve double-checked your tax information using multiple tools reduces the stress that comes with filing your crypto taxes.
Top Software Pairings to Consider
To save you some time, here are some popular software combinations that crypto users have found effective:
- CoinTracking + Koinly: Perfect for advanced traders and those active in DeFi.
- CryptoTrader.Tax + ZenLedger: Ideal for those seeking an easy interface with wide-ranging support for major exchanges.
- Accointing + CoinTracking: Works well for users who prefer mobile app integrations combined with detailed web analysis.
Potential Downsides
Of course, combining multiple tax softwares isn’t perfect. Here are a few things to keep in mind:
- Extra Cost: Each software often comes with its own subscription cost, so you may end up paying more overall.
- Complexity: Managing data in two different places can get complicated. It’s crucial to stay organized and ensure each software is up to date.
Conclusion
Combining multiple crypto tax softwares together can help you cover every aspect of your cryptocurrency investments, from trading and staking to yield farming and NFTs. While it might sound like a bit of extra work, the benefits of accuracy, coverage, and peace of mind make it worthwhile, especially for those who have extensive crypto portfolios.
If you’re ready to simplify your crypto taxes, take a step-by-step approach: identify your needs, pick compatible tools, sync your data, and double-check everything. By doing so, you can confidently file your crypto taxes, knowing you’ve covered every angle.
FAQs: Combining Crypto Tax Softwares
1. Is combining crypto tax softwares legal? Absolutely! Combining tax softwares is simply a way to ensure you cover all your tax bases accurately. It’s completely within your rights to use more than one software.
2. Will combining softwares make my tax process more complicated? It might add a little complexity in the short term, but the long-term benefits of accuracy and reduced risk of errors can make it worthwhile.
3. How do I know which software to combine? Focus on your specific needs – such as DeFi, NFTs, or standard trading – and select softwares that have complementary strengths.
4. Can I combine free versions of different crypto tax softwares? Yes, many crypto tax tools offer free versions or trials. However, the features might be limited, and you may need to upgrade for full capabilities.
5. Are there any costs involved in combining crypto tax softwares? Yes, using multiple tax softwares can increase your costs, as most of them have subscription fees. However, the added accuracy and coverage might justify the expense.
6. Will combining softwares help if I get audited? Yes, having tax reports from multiple credible sources can strengthen your audit defense, as it shows you’ve gone the extra mile to ensure accuracy.