If you’re among the 16% of Americans who transacted with or traded cryptocurrency last year, you’re probably breaking a sweat about the looming deadline to file your taxes (that’d be Monday, April 18). And if you’re an NFT aficionado who changed your Twitter profile picture to an image of a hexagonal, nonchalant monkey, chances are that you’ll want some professional advice while filing.
The U.S. Internal Revenue Service is likely to intensely scrutinize, and perhaps even audit, those who transacted with virtual currency this year, Alex Roytenberg, known on Twitter as @TheNFTCPA, told TechCrunch.
“I personally think the IRS was waiting for a big year of wealth and income to be generated, and 2021 was definitely that year,” Roytenberg said.
He added that because of the lack of formal guidance from U.S. regulators on how to file taxes on various crypto products, the process requires the taxpayer to interpret how existing laws intended to regulate traditional assets might apply to entirely new technologies.
Roytenberg, a certified public accountant, has been a tax accountant for nearly 20 years, working at Morgan Stanley, Goldman Sachs, and PwC. Roytenberg first got exposure to the web3 space in 2018 after advising a number of Coinbase employees, and since then, has aimed to double down on the specialty, co-authoring the “NFT Tax Guide” and speaking at industry events including NFT.NYC.
While Roytenberg recommends that avid crypto traders seek professional, one-on-one tax advice to clear up any gray areas, he also shared his thoughts with TechCrunch on a number of crypto tax prep packages that can be useful for filers this year.
Here’s a rundown of some of the more popular platforms available to crypto tax filers today.
CoinTracker
CoinTracker is one of the best-known names in the crypto tax prep game, offering tax support services to investors in the U.S., U.K., and Canada. Its plans vary in cost — the basic tier is free, while its recommended premium plan starts at $199.
I spoke to CoinTracker’s CEO, Jon Lerner, in January, when the company announced its Series A round that valued it at $1.3 billion. The startup also has exclusive tax prep partnerships with Coinbase and NFT marketplace OpenSea, which gives users of those platforms access to CoinTracker’s software at a discounted price.
More than 3% of the entire global cryptocurrency market, representing over $50 billion worth of digital assets, is tracked on CoinTracker, Lerner told me in January. The platform allows users to see all their crypto activity, including NFTs and decentralized finance (DeFi), in one place, through integrations with over 100 different exchanges and blockchains.
Roytenberg said he likes CoinTracker’s simple, clean interface. He’s had the most success using CoinTracker for his clients whose main crypto activity is trading coins, including swapping one cryptocurrency for another. While the platform does offer support for most “mainstream” NFT projects, Roytenberg considers currency transactions to be CoinTracker’s main strength.
“Hopefully with the OpenSea partnership things get better, but up until now, NFTs haven’t been their area of expertise,” he said.
TaxBit
Founded in 2018, TaxBit connects digital asset transactions across exchanges, automatically calculating gains and losses to help individuals and companies file taxes. It raised $130 million for its Series B last August at a $1.3 billion valuation, TechCrunch reported.
The Salt Lake City, Utah-based startup also happens to have landed a one-year partnership with the IRS last May to help the agency audit the filings of high-volume crypto traders. For individuals, it offers three main plans, ranging in price from $50 to $500.
While it does provide robust accounting and reporting tools for token-based transactions, Roytenberg noted that TaxBit does not currently offer support for NFT tax filing.
He also said that TaxBit no longer provides support for users to grant accountants access to their accounts, meaning they must share their login information directly with any tax professional they choose to work with. Roytenberg said this poses a heightened risk to user security and privacy in contrast to other platforms, including CoinTracker, that allow users to designate an accountant to view their TaxBit information without needing their login credentials.
ZenLedger
Seattle-based ZenLedger announced its $6 million Series A last August, counting Mark Cuban’s venture firm as one of its backers. Despite having only raised a reported total of $11.5 million at that time, compared to much larger sums raised by its competitors, ZenLedger provides tax support for a broad range of use cases, including tokens, NFTs, and DeFi and CeFi products, through its continuously updated dashboard, according to its website.
The software is priced in tiers, ranging from a free plan to its most expensive option, the “platinum” plan, which costs $999.
Roytenberg said that while the platform provides a wide array of services, it does not support ERC-1155s, contracts that manage multiple token types. He added that ZenLedger has delayed its plans to roll out support for some additional blockchains. The company’s website says that it provides support for more than 400 exchanges, over 40 blockchains, and more than 20 DeFi protocols, which it claims is “more than any other crypto tax software.”
CryptoTaxCalculator
Roytenberg praised Australian startup CryptoTaxCalculator, noting that he has had “better success” using its product to help his clients than with ZenLedger.
CryptoTaxCalculator offers four packages, priced from $49 for the “rookie” subscription covering 100 transactions to $299 for the “trader” subscription, which covers up to 100,000 transactions annually.
The company, founded in 2018, supports users in 21 different tax jurisdictions, though 40% of those users are in the U.S., co-founder and CEO Shane Brunette told TechCrunch earlier this month. Its platform is focused on decentralized exchanges and platforms, such as Uniswap and Curve, whose users are not able to easily download a form detailing their trades, gains, and losses like the users of popular centralized exchanges like Coinbase or Binance can.
Its original focus was to support decentralized apps built on Ethereum Virtual Machine (EVM), but it now integrates with over 400 exchanges, according to its website — around the same number as ZenLedger says it supports.
The company announced a few weeks ago that it had raised around $3 million in a round led by Australian venture firm AirTree.
Roytenberg noted its intuitive user interface and the high quality of data pulled onto the platform. CryptoTaxCalculator also provides secure access to accountants assisting users with their tax prep, he added.
TokenTax
TokenTax calls itself a “full-service crypto tax accounting firm,” differentiating it from most of the other names on this list in that it provides services beyond its crypto tax calculation software. It also has the capability of filing taxes on behalf of a user, resembling a product like H&R Block or TurboTax rather than a crypto-specific calculation tool.
Its plans range from $65 to $3,499 a year, with the higher tiers including access to tax experts through chats and meetings as well as support for crypto options trades, according to the company.
The company, founded in 2017, has never announced raising any institutional funding, according to Crunchbase.