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If you interacted with crypto during 2024, a crypto tax software is a must-have tool for you to calculate your cryptocurrency gains and losses in this tax season.
LONDON, ENGLAND - JANUARY 09: In this photo illustration, a visual representation of the digital ... [+] Cryptocurrency, Bitcoin is seen on January 09, 2024 in London, England. Bitcoin investors are expecting the U.S. Securities And Exchange Commission (SEC) to issue a decision soon on whether to grant Bitcoin "exchange-traded fund" (ETF) approval, which would allow people to invest in Bitcoin without having to buy it on a crypto exchange like Coinbase or Binance. The price of Bitcoin has risen in anticipation of such approval. (Photo illustration by Dan Kitwood/Getty Images)
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Cryptocurrency exchanges are different than traditional stock brokers like Fidelity or JPMorgan. These brokers issue a consolidated Form 1099-B listing all your annual proceeds, cost basis and gains/losses from stock transactions. However, crypto exchanges like Coinbase & Gemini are not required to issue such tax forms for the 2024 tax year. Therefore, the burden of properly calculating gains and losses to be reported on the tax return falls on you.
(Note that crypto exchanges will be required to issue a Form 1099-DA starting the 2025 tax year)
How Does Crypto Tax Software Work?
Crypto tax software aggregate transactional data across all your wallets & exchanges, reconcile activity, and compute gains and losses by applying the right tax rules. These software charge an annual subscription to perform this service.
Once all the transactions are reconciled, these tools help you generate Form 8949, Schedule D, and Schedule 1 reports, which you can file with your general tax filing software like TurboTax or H&R Block.
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