For traders, investors, and accountants, Koinly is the top cryptocurrency tax calculator and portfolio tracker. There are numerous features that set it apart from the competition, and this article will highlight five of the most compelling reasons why Koinly is the best crypto tax software available today. These include a broad range of exchange and wallet connectors, DeFi and Cardano support, liquidity transactions support, and multi-country compatibility.
Koinly is the go-to programme for anyone seeking an accurate crypto tax return, a business seeking to maintain their inventory, or an accountant navigating a tangle of transactions. It’s a cryptocurrency tax calculator that makes tax preparation enjoyable. It includes a slew of features and integrations that make it exceedingly simple and convenient to meet all of your crypto tax needs.
Koinly enables easy tracking of crypto assets and taxes across all wallets, blockchains, and exchanges across time. Keeping track of total holdings and portfolio growth over time has never been easier. For free, you may check the actual return on investment and the amount invested in fiat, as well as an income overview and a preview of profit/loss and capital gains. Additionally, generate tax paperwork as needed. Koinly’s tax calculator can assist with tax returns and filing reports and does so in accordance with the country’s tax legislation. If a user is located in the United States of America, Koinly automatically generates completed IRS tax filings. Additionally, the calculator provides international support for residents of Canada, the United Kingdom, Germany, and several other nations. Additionally, Koinly enables taxpayers to simply export transactions to other tax software programmes such as TurboTax or TaxAct.
Say goodbye to false tax reports and erroneous gains; with Koinly, a user may examine their transactions to assist in identifying any issues, owing to a variety of tools. There is a double-entry ledger system – any change to an individual’s asset balances is accompanied by an entry, which simplifies debugging. Additionally, an auto-import verification tool examines wallets through API to guarantee that all imported data is correct. Apart from that, Koinly exposes mistakes caused by poorly imported or missing transactions, which result in balances falling below zero, and skips duplicate transactions regardless of whether they are imported by API or CSV files. There is no reason to keep track of what was imported and what was added.
Most notably, Koinly integrates 350+ exchanges (including Binance, Coinbase, and AscendEx), 50 wallets (including Ledger, Trezor, and Metamask), and 11 services (like Nexo, BlockFi and Paxful). No more switching between platforms. Simple data synchronisation with Koinly provides a complete picture of all trading activity.
Support for DeFi
Additionally, when a user establishes a new ETH, BSC, or Polygon wallet, Koinly can automatically import all trades and liquidity transactions from Uniswap, Sushiswap, Cream, Value, Balancer, PancakeSwap, and many other DeFi platforms. With tax authorities throughout the world tightening down on cryptocurrency investors, it is critical to understand what DeFi is and the tax ramifications of DeFi investments. DeFi is not a monolithic notion. It is an umbrella word for a variety of financial applications created on top of blockchain or bitcoin technology. DeFi protocols are self-contained programmes (smart contracts) designed to do certain tasks.
DeFi protocols assist in resolving issues that occur in the traditional financial sector. For instance, if someone applies for a loan with a traditional bank, they would often be required to submit identity, proof of income, and evidence of residence, in addition to completing other paperwork. Nonetheless, with DeFi, all that is required is for someone to deposit an asset into a specific protocol, which will take care of the rest. The protocol establishes the conditions, terms, and rules. If a party defaults on payments, the protocol will terminate the contract; this is only one example of the hundreds of DeFi protocols available. A user can do any operation via a centralised crypto exchange using DeFi protocols, including the following:
- Transfer funds to anybody, anywhere
- Distribute funds globally
- Commence a savings account
- Convert fiat money, coins, and tokens
- Manage and increase the value of a financial portfolio
- Borrow money with or without the use of collateral.
- Margin trading, derivatives, and leveraged trading
- Borrow money from one’s own account in order to earn interest or prizes.
- Convenient access to and investment in stable currencies
- Crowdfund the development of new DeFi platforms, services, and applications
- Purchase insurance
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While tax authorities have not yet published specific guidance on DeFi taxes, they have provided clear information on cryptocurrency taxation. Due to the fact that cryptocurrencies are regarded assets for tax reasons, they are always taxed in one of two ways – income tax or capital gains tax – depending on whether someone’s crypto investment is considered regular income or a regular income disposition of an asset. Understanding what type of taxation applies to an investment can be difficult for many, which is why crypto tax calculator software like Koinly makes it more accessible.
Individuals can use Koinly’s crypto tax software to calculate all crypto taxes, including DeFi taxes. Someone must either utilise the API to sync their wallets and exchanges with Koinly or import a CSV file of their crypto transactions. Koinly will classify and tax various cryptocurrency transactions. Although the data should be labelled automatically, a user can identify DeFi transactions as loan interest, interest received from the pool, interest given to the pool, or as a reward.
Over 100 Countries Are Supported by Koinly
Koinly is a better option than many other tax software for foreign tax reports, as it supports over 100 countries. It is offered in a variety of countries, including:
When someone switches their home country, Koinly creates localised copies of tax returns, which involves more than simply updating some currency amounts. For instance, if a user relocates from the United States of America to Australia and picks Australia as their home country, Koinly immediately adds tax report options tailored to that country.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.