Five Reasons Why Koinly Is the Best Cryptocurrency Tax Software.
For traders, investors, and accountants, Koinly is a top cryptocurrency tax calculator and portfolio tracker.
There are a number of features that set it apart from the competition, and this article will outline five of the most important reasons why Koinly is the best crypto tax software available today.
These include a variety of exchange and wallet connectors, DeFi support, Cardano support, liquidity transaction support, and multi-country compatibility.
Koinly is the go-to programme for anyone searching for an accurate crypto tax return, a business wishing to maintain their inventory, or an accountant trying to sort through a maze of transactions. It's a cryptocurrency tax calculator that makes filing taxes fun. It comes with a slew of features and integrations that will make it extremely easy and convenient to satisfy all crypto tax needs.
Koinly makes it simple to keep track of crypto assets and taxes over time across all wallets, blockchains, and exchanges. It's never been easier to see your overall holdings and portfolio progress over time in one location. For free, you may see the actual ROI and invested money, as well as an income overview and a preview of profit/loss and capital gains. Apart from that, generate tax paperwork as needed. Koinly's tax calculator may assist with tax returns and filing reports, and it does so in accordance with a person's country's tax legislation.
Koinly generates filled-in IRS tax forms if the user is in the United States. People in Canada, the United Kingdom, Germany, and a number of other nations can use the calculator as well. Taxpayers can also easily export transactions from Koinly to other tax software such as TurboTax and TaxAct.
Say goodbye to erroneous tax returns and inflated profits; using Koinly, users may examine their transactions to identify any issues using a variety of methods. A double-entry ledger system is used, which means that any change to a person's asset balances is accompanied by an entry, making it simple to debug. An API-based auto-import verification tool also verifies wallets to guarantee that all imported data is valid.
Apart from that, Koinly also flags issues caused by poorly imported or missing transactions, which cause balances to drop below zero, and skips duplicate transactions when using API or CSV files to import. It's not necessary to keep track of what's been imported and what's fresh.
Most significantly, Koinly's connectivity with 350+ exchanges (including Binance, Coinbase, and AscendEx), 50 wallets (including Ledger, Trezor, and Metamask), and 11 services allows you to keep track of all your transactions in one spot (like Nexo, BlockFi and Paxful). There will be no more switching between systems. Simple data sync to Koinly for a complete picture of all trading activity.
DeFi Support
When a user establishes a new ETH, BSC, or Polygon wallet, Koinly can instantly import all trades and liquidity transactions from Uniswap, Sushiswap, Cream, Value, Balancer, PancakeSwap, and many other DeFi platforms. With tax authorities throughout the world coming down on crypto investors, it's more important than ever to understand what DeFi is and what tax ramifications DeFi investments have.
DeFi is more than an idea. It's a broad phrase that refers to a variety of financial apps that use blockchain technology or cryptocurrency. DeFi protocols are self-contained programmes (smart contracts) that perform certain tasks.
DeFi protocols aid in the resolution of issues that occur in the traditional financial sector. If someone wants a loan from a traditional bank, they will often be required to show identity, proof of income, evidence of residency, and the completion of numerous documents. Nonetheless, with DeFi, all that is required is for someone to deposit an asset into a certain protocol, which will take care of the rest.
The protocol specifies the terms, conditions, and norms that must be followed. The protocol will liquidate the contract if someone fails to make payments; this is only one example of a DeFi protocol out of hundreds that exist. With DeFi protocols, a user can do anything through a centralised crypto exchange, including:
- Money can be sent to anyone, anywhere
- Stream money all across the world
- Make a savings account for yourself
- Tokens, coins, and fiat currency can all be exchanged
- Develop and manage a financial portfolio
- Borrow money with or without a security deposit
- Margin, leveraged trading, and derivatives
- To earn interest or prizes, you can lend your own money
- Stable currencies are available to access and invest in
- New DeFi platforms, services, and apps can be crowdfunded
- Get insurance
- Place a bet on how current events will turn out
Despite the fact that tax authorities have yet to publish specific instructions on DeFi taxes, they have provided clear information on crypto taxation. Because cryptocurrencies are considered 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 regarded a regular income or a regular income asset disposal. Many people find it difficult to grasp what kind of tax applies to their investment, thus crypto tax calculator software like Koinly makes it easier to understand.
Individuals can use the Koinly crypto tax programme to calculate all crypto taxes, including DeFi taxes. Someone will need to use Koinly's API to sync their wallets and exchanges, or import a CSV file of their crypto transactions. Different crypto transactions will be identified by Koinly, and the appropriate taxes will be applied. If the data is not automatically labelled, a user can categorise DeFi transactions as loan interest, an interest payment received from the pool, as given to the pool, or as a reward.
Cardano Support
Koinly can help you with your Cardano (ADA) taxes by staking on wallets like Yoroi and Daedalus, in addition to around 17000+ cryptocurrencies and 50 different blockchains. Cardano is a proof-of-stake blockchain platform that was founded in 2015 by Ethereum co-founder Charles Hoskinson.
In financial markets, the phrase liquidity refers to the ease with which an asset can be changed into cash without difficulty. Liquidity in the context of cryptocurrencies refers to a coin's ability to be quickly converted into cash or other crypto coins. Every day, liquidity transactions are carried out since liquidity is required for any tradeable asset.
The question of whether liquidity transactions are taxable or not is hotly debated. On the Ethereum, Binance Smart Chain, and Polygon blockchains, Koinly presently enables liquidity transactions. Liquidity transactions are immediately imported and marked as Liquidity in/out. It presently supports a number of liquidity protocols, including:
Uniswap, Sushiswap, Sakeswap, Snowswap, Mooniswap, Curve.fi, Bancor, yearn Finance, PancakeSwap, Value, Cream, STM Network, APY Finance, Pancake, 1inch; the list goes on.
Because we are trading tokens for an LP token that may be traded or staked to generate more coins, Koinly treats liquidity transactions as taxable by default. If someone believes that such liquidity transactions should not be taxed, Koinly has the option to turn it off in the 'Realize gains on liquidity transactions' section of the settings page.
Koinly Supports Over 100 Countries
Because it covers over 100 countries, Koinly is a suitable choice for international tax reports over other tax software. It is available in different countries like:
- USA
- UK
- Canada
- Australia
- Brazil
- New Zealand
- Denmark
- Finland
- France
- Germany
- Japan
When someone moves their home country, Koinly creates localised versions of tax reports, so it does more than just adjust the currency amounts. If a person moves from the United States to Australia and chooses Australia as their home country, Koinly will automatically add tax report choices tailored to that country.
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