A Comprehensive Guide To Koinly; Overview, Features & Use Cases

Koinly, is one of the most popular and user-friendly softwares allowing users to track transactions across hundreds of exchanges and digital wallets.

Acceptance of cryptocurrency in different forms in different regions raised the need for a cryptocurrency tax calculator. Koinly, a crypto tax software thus introduced to the crypto universe to make crypto transactions and related activities effortless. 

Let’s uncover the facts and features linked to the respective crypto tax software.

What is Koinly?

Koinly was founded by Crispian Robinson, Maria Bilo, and Robin Singh in 2018 and is legally known as Koinly Pte Ltd. It is a platform that generates tax reports for crypto trading and similar activities automatically.

In blending with all the key blockchains and exchanges including Binance, Coinbase, Bittrex, etc., the platform mitigated crypto tax reporting to a few minutes of work. It is emerging as one of the most popular cryptocurrency tax software solutions and is mainly developed to help crypto users calculate and report related taxes.

Easy import of trades, preview of capital gains, and download of tax documents enhanced the value of the platform among investors. It is one of the best software that solves all crypto tax-related issues effortlessly. 

Koinly Features 

The cryptocurrency tax calculator and portfolio tracker hold a wide variety of features that make it an unbreakable part of the crypto universe.

• Individuals can track real-time crypto transactions as well as gains or losses.
• The platform supports around 400 crypto exchanges, 20,000 crypto assets, 170+ blockchains, and wallets.
• It supports a wide range of accounting methods including FIFO, LIFO, Highest Cost, Average Cost Basis, and more.
• Integration with key tax software such as TurboTax and TaxAct is a significant feature.
• User-friendly interface and tax reports for over 100 nations including the UK, US, Canada, and Australia.
• Portfolio tracking, integration, data import, transaction monitoring, and crypto tax reports are major benefits of the software.

How the software resolved the crypto taxes problem

Since the day cryptocurrency was launched, Cryptocurrency transactions become taxable in most of the developed and developing nations. Moreover, there are no appropriate rules and regulations to govern all the transactions as a digital asset is classified differently in different nations. 

In some regions, crypto is classified as a property, whereas in some regions it is considered as maliciousness or intangible property. To resolve this issue and update with the latest crypto tax rules, Koinly was introduced. 

It helps in simplifying the crypto tax accountabilities through automated determination of tax implications and each transaction. It also helps in avoiding human errors and saves time in generating ready-to-sign tax reports.

How does the platform work?

Registration: The very first step is registration in which the user can sign up for the platform using a Google account and additional details including country, desired plan, and base currency. The platform uses universal accountancy methods including First In First Out (FIFO), Last In First Out (LIFO), Highest Cost First Out (HIFO), and Average Cost Basis (ACB).

Data Importation: Once registered over the platform, the next step is to link the crypto wallet, crypto exchange, and blockchains manually or automatically by entering API keys which are encrypted for security.

Review and verification: after accomplishing the data importation the next step is review and verification. The step helps in ensuring that all the data has been imported accurately. Confirm the accuracy of the imported data. The platform doubles as a portfolio tracker, reviewing transactions, and establishing cost bases, market values, and profit calculations.

Tax report generation: Once data is verified, detailed tax documents are ready for export. These reports are compatible with tax software like TurboTax and can be sent to accountants. The platform’s premium services include the creation of IRS-compliant documents such as Form 8949 and Schedule D.

Pros and cons of the crypto tax software

Advantages: Localized tax reports in around 20 countries and generic tax reports acceptability in approximately 100 countries is one of the main benefits of the respective platform. Another main benefit is the availability of the tool for free of cost and an easy user interface.

It supports around 20,000 crypto assets, 100+ wallets, 170+ blockchains, and 400+ exchanges which enhances its accessibility for investors. The platform detects duplicate transactions that should be excluded from tax reporting.

Disadvantages: The platform is not 100% automated and a few of the transactions require manual input. A few of the users face errors when importing transaction history. Additionally, for RSI-compliant tax forms, the user needs to purchase the paid version which can be expensive for high-volume traders.

Some Alternatives of Koinly

Although Koinly is one of the best platforms when it comes to crypto tax reports there are a few challenges. Here are a few of the alternatives users can explore:

CoinLedger: It is another crypto tax software that aims to simplify the procedure of tracking transactions and tax reporting for digital assets. It supports over 400+ exchanges, and 10K+ transaction limits. IRS Form 8949 and International tax reports are supported by CoinLedger. 

CoinTracking: Another tool widely used for crypto tax reporting is CoinTracking which is the first and leading digital asset portfolio tracker and crypto tax calculator. It offers unlimited transaction limits, supports 70+ crypto exchanges, and works with IRS Form 8949 and International tax reports.

Conclusion

Koinly, the crypto tax software makes it easy for investors to keep track of the activities and crypto transactions. The software is compatible with a wide variety of cryptocurrencies, exchanges, and blockchains which enhances its acceptability and accessibility. IRS Form 8949, Schedule D, and International tax reports are the main tax reports supported by the respective software.

FAQs

Is the software free to use? 

The software offers a free version as well as a paid version. The free version holds limited features whereas the paid version offers a wide range of offerings. 

Why use crypto tax software?

Operating with crypto taxes is complex due to the nature of actions that can have different tax implications and reporting needs. Crypto tax software thus helps in ensuring the accuracy and compliance related to the crypto transactions and actions.