Pull a Marty McFly and beam back to 2018 – the term “crypto” is a byword for “scam” and economist Nouriel Roubini is triumphantly calling the crypto space “La-la land.” Fast forward to 2021 and the L.A. Lakers’ basketball arena has been renamed “Crypto.com Arena,” National Football League legend Tom Brady is trading non-fungible tokens (NFTs), and El Salvador has made bitcoin (BTC) a legal tender.
Much of the media attention is going to the metaverse, all-time price highs and DOGE with the future of finance is being pushed on all sides. But perhaps the most archaic part of finance is getting a 21st-century makeover, as well. That dinosaur is called the tax industry.
Stephan Roth is a London-based financial journalist who has reported on cryptocurrency since 2018. He has previously worked for KPMG, CNNMoney and ACCOINTING. This article is part of CoinDesk’s Tax Week.
In recent times, the tax industry has made strides in its attempt to understand the industry and flesh out the nitty-gritty tax details that come with a brand-new asset class. However, filing crypto-related taxes can still be an arduous task, with a variety of different forms, calculations and recording of transactions.
That said, a host of young, innovative and ambitious crypto tax companies have risen to the occasion – ready to reduce your tax-related stress before deadline day.
I’ve spent some time going through each company, speaking to key people, analyzing the prices of their products, the number of applications available and using their user interfaces. Here’s what I found.
The bitcoin bug bit Dennis Wohlfarth in 2014 when he was working in Italy as a mechanical engineer servicing Ferrari. Three years later, a group of founders hailing from Germany, Switzerland and the United States fleshed out the blueprint for Accointing.com, and they subsequently launched the company in 2019.
With a European vibe, Accointing offers crypto tax reporting solutions for Australia, Austria, Germany, Switzerland, the U.K. and U.S., ranging between $79 and $299 (plus a free tax report), as well as a portfolio-tracking app and desktop solution. Included in its offerings is a product called Trading Tax Optimizer, which can help users optimize their taxes through tax-loss harvesting and analytics.
Earlier this year, the startup partnered with Swiss-based audit giant BDO Global, bolstering its brand as well as cementing a key traditional tax partner in Europe. “We want our team to bring in their personal touch … so we can expand our tax solutions in Europe and then to the APAC (Asia-Pacific). We want to expand our blockchain connections, NFT and decentralized finance (DeFi) tax support [and] our portfolio features,” Wohlfarth says.
Kickstarted in 2017, CoinTracker is the brainchild of former Google employees Jon Lerner and Chandan Lodha, who have embraced an “engineering-driven culture” and who turned CoinTracker into a unicorn this January, when CoinTracker announced an exclusive partnership with crypto exchange Coinbase, embedding its software directly within Coinbase’s tax center.
“We want to be the layer that helps people interact with crypto and not give them headaches in relation to compliance matters,” said Shehan Chandrasekara, CoinTracker’s head of tax
CoinTracker offers four types of tax solutions covering Australia, Canada, the U.K. and U.S. – with tax packages ranging from a free tax report and paid options ranging from $49 to a $159 package. It also provides an “Unlimited” solution that is priced individually.
Another strong suit is the company’s enterprise solution, with the “biggest players” in the market looking to do business with CoinTracker.
Rounding up its offerings is a portfolio tracker that provides exclusive insights into a user’s holdings and allows the user to tax-loss harvest and track NFTs and DeFi transactions.
This year is going to be big for CoinTracker, Chandrasekara said. “We will continue to hire aggressively and listen to our users. We expect to reach 1 million-plus users on the platform during [this] tax season,” he said.
CoinLedger – formerly CryptoTrader.Tax – was born of necessity in 2017 because David Kemmerer, Mitchel Cookson and Lucas Wyland were looking to report “over 120,000” trades made through arbitrage investing. “We were pretty frantic,” Kemmerer, the CEO, says. “There was nowhere to report our taxes, so we had to fix the problem ourselves.”
Tasked with figuring out how to report its own holdings, CoinLedger had to develop the “picks and shovels” for its tax tool, releasing the first version of its tax platform in spring 2018.
Read More: US Crypto Tax Guide 2022
Since then, CoinLedger has built a tax tool offering geared toward the U.S. market, allowing users to tax-loss harvest and benefit from its TaxAct feature – helping users navigate tax season. Prices per tax offering range from $49 to $299, with the most expensive solution allowing reporting for an unlimited number of transactions. It also offers a business-to-business (B2B) solution, helping certified public accountants (CPAs) serve their personal clients.
Read More: Review of 6 Crypto Tax Software Packages