Tax Softwares

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Kaffiend
Posts: 30
Joined: Tue Jul 27, 2021 2:28 pm

Re: Tax Softwares

Post by Kaffiend » Sat May 07, 2022 1:04 am

This was my first year mining/ doing crypto taxes. I GPU mine ethash with prohashing. I tried over a dozen tax softwares. Most have some sort of free version for up to 20 transactions and then must pay after that. You could still load all your data but when it comes to tax time you have to pay. There were the few out there that you had to pay upfront to even try. Me personally I would not pay for something without knowing how it was going to work. Not a single one worked flawlessly. I mine on prohashing and pay mostly to coinbase but also have a couple core wallets and whatnot. Nothing integrated perfectly on any of them. I thought I really wanted to use Accointing. I liked there layout and thought having the short and long term capital gains was a real plus. I cant remember for sure i think it was one of the more expensive softwares. But again I couldnt get things right with it. The deciding factor not to use them in the end was the 3.5 months it took to reply back about questions I had and not even fully answer them. While they did apologize for the long wait saying they were completely backed up this is unacceptable to me since taxes do have a deadline and if I have questions and need help I may need the answers now, not 3+ months later. In the end I found Koinly to work best for me and the couple times i contacted with quests the answered back within a few days with solutions.

Some would consider the daily earnings to be credited to your account and in your possession at the end of the day even though you technically haven't met the payout threshold and been paid out. Others say you dont claim it till it actually hits your wallet. People will argue it both ways which I don't wanna get into. Im not a tax pro but in the end I would assume it would work out to be just about the same either way and still be acceptable by the IRS but you would have to consult someone on that for to be sure. In the end I was uploading the daily earnings just to be on the safe side. I had some 7500+ transactions by doing it this way meaning I had to pay for a larger tax plan. One of my payout is also USD to bank account. What i did for that was upload it into the tax software as income like all my other crypto payouts saying it was on a exchange as fiat. But then on Dec 31 I did a single manual entry to remove it as a withdraw. Doing it this way was much quicker and easier than creating a manual entry for every days earnings and works all the say since it is stable and does not increase or decrease in value. There will not be any capital gain or lose.

To get the info into Koinly I used prohashings, coinbase, etc exported .csv files. I downloaded a free word software called apache open office (like excel but free). From there I figured out how Koinly wanted there CSV files laid out. With this word program I manually recorded a macro of me making all the needed changes for each CSV file I needed to upload. So 1 macro for prohashing, a different one for coinbase, and for ....... Now when ever I need to upload a new CSV file to update earnings I export a csv , open it in open office software and then run the associated macro. In seconds its done and can be imported into Koinly.

On top of Koinly I still also had to pay my CPA $600 to prepare my taxes. I still dont know for sure if this is a reasonable fee. Everything that I was reading was saying most tax pros charge about 175/hr to go through the material and do the taxes. It sounded like most people paid anywhere from $600-$2400 depending on their situation. So I think my price was right but I may never know for sure. My CPA suggested continue to use a tax software (like Koinly) because it definitely cut down on the time that was needed to prepare my taxes. Otherwise I would be charged more to prepare them from scratch since he would have to go through every transaction himself.

I dont know how the merge mining transactions look on the csv file but have to assume its looks the same, its just showing what your earnings are after whatever you mine is converted. You would be uploading your daily earnings for each coin or the USD.

Hope something here is useful to you.
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