Free vs Paid Crypto Tax Software: Which Should You Choose?

Crypto tax software tools have made fulfilling tax obligations easier. Instead of manually scanning through piles of crypto transactions every tax year, these automated tools help users to file tax reports with ease and accuracy. Still, most of these platforms charge a fee that some users may find expensive. This begs the question: Are there free crypto tax software tools?

This article provides deep insights into free crypto tax software vs paid crypto tax tools. It also discusses popular crypto tax software tools and whether they are free.

Why Use Crypto Tax Software?

Crypto taxes are financial obligations that every taxpayer must fulfill each tax year based on their crypto activities. Most countries implement crypto-specific tax laws that classify activities, such as staking, trading, mining, airdrops, and yield farming, under capital gains or income. Knowing where to group each transaction is the easy part. Compiling these data to create a tax report is where the difficulty begins.

Crypto tax software makes it easy for anyone to track their transactions and calculate the applicable taxes. It is an automated tool that allows users to import their data, track their portfolio, and generate jurisdiction-specific tax reports. It is useful whether you are a basic crypto user, an institution, or an advanced crypto enthusiast investing in sectors such as decentralized finance (DeFi) or non-fungible token (NFTs) ecosystems.

There are several reasons to use crypto tax software. They include:

• Accuracy.
• Time saving.
• Regulatory compliance.
• Tax-saving opportunities.
• Dedicated customer support.

Free vs Paid Crypto Tax Software: Which to Choose

As mentioned earlier, most crypto tax software tools have paid services in different tiers. Still, there are free crypto tax software tools out there. Here is a detailed breakdown of both kinds of tax tools:

Free crypto tax software

Free crypto tax software is a tool that allows users to track and calculate their crypto transactions to prepare tax reports without paying a fee. This article will highlight some free options reviews.

The fact is, most popular crypto tax software allows users to access some of their services for free. These services include transaction imports, a tax calculator, a profit calculator, a tax summary, and portfolio tracking. However, services like downloading ready-to-file tax reports are reserved for paid users.

As a result, free crypto tax software is best suited for investors who need an automated tool to enhance their tax report preparation. The taxpayer needs to use the data provided by the tax software to prepare their tax filing.

Pros

• It requires no cost to use.
• It allows access to automated tools to augment the tax filing process.
• Saves time spent preparing tax reports manually.

Cons

• Access to fewer features.
• Often does not have customer support.

Paid crypto tax software

A paid crypto tax software is an automated tool that assists taxpayers in calculating their crypto taxes and generating tax reports, all included in a pricing package.

Most crypto tax software offers most of its services through a tiered pricing plan, paid each tax year. When someone wants to choose a pricing plan, it is worth considering between two or three crypto tax tools. Compare the features they enable under each pricing package and the amount for each. This way, you put yourself in line to make the most from your spending on the paid service.

The services available to paid users include tax-loss harvesting, access to tax forms from previous years, one-on-one interactions with tax accountants, and integration with H&R Block and TurboTax. Some platforms also offer a paid service in which they handle the entire tax preparation and filing for the client.

Paid software benefits taxpayers with voluminous crypto transactions, those seeking jurisdiction-specific tax filing, and those requiring access to tax experts and certified public accountants (CPAs). To build users’ trust, some platforms offer a money-back guarantee in the eventuality that the taxpayer is unsatisfied with the service.

Pros

• They give access to more services.
• Some plans offer a money-back guarantee.

Cons

• It may be costly for some users.

Are crypto tax software tools worth paying for?

The simple answer is yes. This is especially true if your crypto activities go beyond periodic buying or holding. If you trade actively, explore DeFi platforms, mint NFTs, or use several wallets, a paid tax tool will be worth the spend.

The main value of paid software is the convenience it provides. Instead of doing everything manually, you get automated tracking, accurate calculations, and access to detailed features that simplify your tax filing process.

But how much should you pay? That would depend on how often you use crypto. Crypto tax software providers set a maximum number of transactions per pricing tier. If your total transactions for the tax year fall under a specific threshold, then you can stick with a plan that covers it.

Thanks to services such as tax-loss harvesting, taxpayers can stand in line to receive discounts on their taxable events. This way, they get to cut down on the levies they pay during a tax year. This discount could exceed the cost of the software pricing plan. Most platforms also offer all their services to users for 30 days, without mandating them to submit their credit card details.

Still, it is worth noting that not everyone needs to pay for crypto tax software. If you are a beginner or someone who only buys and holds crypto without trading frequently, a free plan may be sufficient. Many platforms offer free tiers that support a limited number of transactions, which is ideal for individuals with a simple trading history. The key is choosing something that matches your level of activity and your unique crypto habits.

How to choose the best crypto tax software tools

Choosing the best crypto tax software application can be pretty challenging, especially as new apps are being launched almost every day. That said, there are several factors to consider in order to pick the right tool.

The first thing to check is how many exchanges, wallets, blockchains, DeFi/NFT projects, and crypto assets the app can integrate with for accurate tax filing. You want to ensure that the platform supports all the ones you use.

Next, a crypto tax tool should offer multiple accounting methods, let you edit or merge transactions when needed, and generate complete tax reports that you can submit or share with your tax professional. A detailed dashboard is important too. You should be able to see your total gains, total losses, income from staking or airdrops, and any errors that need fixing.

Pricing is also an important thing to consider. Compare the cost of each plan, especially the number of transactions allowed. Some crypto tax tools charge based on users’ transaction volume. This implies that if you trade frequently, you may need a more advanced plan. If you only make a few trades per month, a cheaper option will work well.

Lastly, check reviews and community feedback. Crypto tax tools are widely discussed online, so real user experiences can help you avoid tools with poor customer service or inaccurate calculations. Choose something reliable, simple, and capable of handling your crypto activity.

Top 5 Crypto Tax Software Tools

This article covers a list of free crypto tax software vs paid crypto tax tools. As we discuss them, take note of the cryptocurrency tax software pricing comparison. Here they are:

Koinly

Koinly is a crypto tax software that allows users to track their crypto transactions to deduce their taxable events and generate tax reports. It is available in over 20 countries and works closely with partners, such as TurboTax and H&R Block.

It has free and paid packages. Its best free bitcoin tax tools encompass features such as 10,000 transactions, portfolio tracking, capital gain review, tax optimizer, DeFi & NFT support, spam detection, 20,000+ cryptocurrencies, bulk editing & rules, data imports, smart transfer matching, error reconciliation, email support, and more. You can also see the summary of your capital gain and income for the tax year under the free package.

Here’s a breakdown of its paid plans:

• Newbie ($49): Services include 100 transactions, tax reports generation, DeFi & NFT support, portfolio tracking, data imports, error reconciliation, chat & email support, and more.
• Hodler ($99): Services include 1,000 transactions, capital gain preview, tax reports generation, tax report exports to TurboTax/TaxACT, smart transfer matching, and exchange & transaction fee tracking.
• Trader ($199): Includes 10,000+ transactions and all other features available on Koinly.

CoinLedger

CoinLedger is another crypto tax software that enables free and paid usage. It saves users money by allowing them to avoid paying taxes on crypto losses. Some of its key features include DeFi and NFT tax reporting, portfolio tracking, pricing calculator, international tax reporting, and integration with TurboTax, Tax Act, and others.

The crypto tax software has a free tier, dubbed Portfolio Tracking. Its services include unlimited transactions, 100 micro-transactions (such as staking and interest payouts), 20,000+ cryptocurrencies, unlimited reviews, capital gains overview, chat support, data import, and error reconciliation.

Its paid services are grouped into two categories: Tax Reports (DIY) and Professional Services. For the Tax Reports (DIY), here’s the pricing breakdown:

• Hobbyist ($49): Services include 100 transactions, 100 micro-transactions, portfolio tracking, chat support, tax loss harvesting, audit trail report, income and capital gain reports, international tax reports, data import, and tax software integrations.
• Investor ($99): It covers up to 1,000 transactions and every other feature in the Hobbyist section.
• Pro ($199+): Services include over 3,000+ transactions and every other feature in the Investor package.

NOTE: CoinLedger offers a 14-day money-back guarantee.

For the Professional Services, CoinLedger offers:

• Expert Review ($499): Here, a CoinLedger expert reviews your data and provides expert guidance.
• Done For You ($500/hour): Here, you work one-on-one with a CoinLedger expert who imports your data and provides you with the finalized tax report.

Summ (CryptoTaxCalculator)

Summ (formerly CryptoTaxCalculator) is cryptocurrency tax software for both beginner crypto users and professional crypto traders. Its services include its portfolio tracker, identification of tax-saving opportunities, DeFi and NFT support, and many more.

It has a free and paid tier. For its free trial, users can import transactions, track their portfolio, access DeFi and NFT support, and smart suggestion and auto-categorization engine. Its paid services are grouped into four, with each package offering a free trial for a specific duration. They are:

• Rookie ($49): Services include 100 transactions, unlimited integrations, portfolio tracking, TurboTax integration, and email + chat support.
• Hobbyist ($99): It features 1,000 transactions, automated on-chain transactions, smart contract transactions, and other features under the Rookie package.
• Investor ($249): It includes 10,000 transactions, a tax-minimization algorithm, multiple inventory methods, tax-loss harvesting, an audit report, and all other features of the Hobbyist plan.
• Trader ($499): It covers 100,000 transactions and all other features in the Investor tier.

TokenTax

TokenTax is a crypto tax software designed for heavy crypto traders. It introduces a team of accounting experts to help taxpayers augment their tax filing process. It also facilitates tax report generation with their clients’ local tax regulations in mind.

Unlike its peers, TokenTax’s free plan covers fewer features. They are data imports, customer support, and basic insights into its services. The platform’s paid service, on the other hand, encompasses:

• Basic ($65): Services include 100 transactions, income reports, IRS audit trail transaction report, TurboTax online integration, live chat support, FIFO, LIFO, specific ID accounting, and DeFi/NFT support.
• Premium ($199): Services include 5,000 transactions, tax-loss harvesting, manual imports for ICOs & OTC trades, an Ethereum gas fee report, and every other feature under the Basic plan.
• Pro ($1,999): Services include up to 20,000 transactions, margin/options PnL calculations, FBAR, automatic CSV imports for all exchanges, and every other feature under the Premium package.
• VIP ($3,499): It features advanced crypto reconciliation, two 30-minute consultations with tax experts, up to 30,000 CEX transactions, review of IRS inquiries, priority chat support, and every other feature open to TokenTax users.

CoinTracker

CoinTracker is a crypto tax software tool that enables tax filing within five minutes for individual and enterprise clients. It allows users to file their taxes with TurboTax, H&R Block, or other tax accountants they know. It complies with the tax regulations of various countries worldwide.

The platform has a free and paid plan. Its free package covers self-serve support, portfolio tracking, and tax summaries. Its paid services are grouped into four:

• Base ($59): It covers tax forms across various years, portfolio tracking, TurboTax/H&R Block integrations, and up to 100 transactions per year.
• Prime ($199): It covers tax lot breakdown, tax-loss harvesting, performance tracking, up to 1,000 transactions per year, and every other feature in the Base package.
• Ultra ($599): Services include priority support, change cost basis method by year, up to 10,000 transactions per year, and every other feature under the Prime plan.
• Full Service ($3,499): It covers the Ultra plan alongside a dedicated account manager, personal assistance in managing and importing CSV files, and a team of experts to review transactions, reconcile accounts, and fix errors. They also provide quarterly account health reviews for clients.

FAQs

What is the cheapest crypto tax software?

Koinly, Summ, and CoinLedger are the cheapest crypto tax software tools. This is because their least pricing package is $49. The difference is in the number of features they offer under this package.

When should I upgrade my crypto tax software?

You should upgrade your crypto tax software from the free version to the paid interface when you wish to download tax reports that are specific to your local tax laws. It is also worth exploring an upgrade when you have large volumes of crypto transactions within a tax year. This way, you are guaranteed to have an accurate tax filing free of human errors. Being aware of these will help you know when to upgrade crypto tax software.

What benefits does free crypto tax software offer?

Free crypto tax software offers a range of benefits, including portfolio tracking, tax summaries, a profit calculator, and a tax calculator. However, on most platforms, accessing advanced services, such as generating jurisdiction-specific tax laws, is accessible solely to paid users.

Conclusion

It is no surprise that millions of crypto users today have adopted crypto tax tools to make fulfilling their tax obligations easier. We also highlighted five platforms offering these services. This article highlighted free crypto software tools vs paid crypto tax tools. Our best software list provides both free and paid packages. Hence, it is vital to carefully compare platforms to determine the best-suited software, based in pricing and supported features.