TaxBit Review 2022: Features, Plans, & Pricing

As a cryptocurrency investor, filing your taxes can be cumbersome. Between tracking capital gains, trading fees, and additional income from sources like staking, record keeping is certainly challenging.

Thankfully, there are several cryptocurrency tax software companies that help make tax filing faster and simpler. One of the most popular companies in this space is TaxBit, a crypto tax platform that’s backed by PayPal Ventures.

With over 500 exchange integrations and downloadable tax forms, TaxBit has plenty of useful features for investors. However, it’s important to know exactly how TaxBit works and if it’s the right choice for you before spending your money.

Pros & Cons

About TaxBit

TaxBit states it’s the number one cryptocurrency tax software, and the company is definitely making a splash. After starting in 2018, TaxBit went on to secure millions of dollars in funding from the likes of PayPal Ventures and various venture capital groups. Considering this backing, it’s clear that TaxBit has major plans for becoming a market leader.

TaxBit also has numerous partnerships with cryptocurrency exchanges like Gemini and crypto interest account providers like BlockFi. Overall, it’s one of the most popular crypto tax software options out there alongside competitors like CoinTracker and ZenLedger.

What It Offers

The IRS began treating virtual currencies like property back in 2014. This means that anyone investing in cryptocurrencies like Bitcoin needs to report this activity on their tax returns.

For small portfolios or anyone who just buys and holds, this isn’t always a headache. But if you’re a frequent cryptocurrency trader or someone who earns additional income from sources like cryptocurrency mining or staking, reporting gets complicated.

But with TaxBit, you can quickly consolidate all of your cryptocurrency transaction information, download tax forms, and ultimately file your taxes more easily.

Robust Free Plan

TaxBit integrates natively with over 500+ cryptocurrency exchanges, seven blockchains, and a variety of decentralized finance (DeFi) protocols that are part of the TaxBit Network.

And the company recently announced that if you're a user of one of these TaxBit Network companies, you can use TaxBit's Free plan which supports an unlimited number of transactions. That's a deal that you won't be able to find anywhere else right now. All other companies that we've reviewed so far either don't have a Free plan or if they do, the transaction limits are very low.

Once you create an account, you connect your exchanges and wallets of choice to TaxBit. From there, the software imports all of your holdings and transaction data so it can prepare your tax forms.

Having nearly 500 cryptocurrency exchange integrations means almost any investor can use TaxBit. Some notable exchange and wallet integrations include:

• Binance
• Bisq
• BlockFi
• CashApp
• Coinbase
• Crypto.com
• Gemini
• Kraken
• KuCoin
• Ledger
• Metamask
• Trezor
• Uphold

Linking exchanges and wallets is also simple. You search for the name of the platform you want to link, login, and then authorize the connection. After linking, you click a “sync all transactions” button so TaxBit consolidates your cryptocurrency trades and performance.

TaxBit also lets you manually add transaction information or upload a CSV file with numerous transactions if you want to avoid linking accounts.

It usually takes several minutes for transaction data to sync. Afterwards, TaxBit displays a list of coins, total value, and realized gains or losses in a central dashboard.

This dashboard provides a snappy overview of how your holdings are performing. However, if you want a more robust crypto portfolio tracker, software like Kubera is superior. While TaxBit shines in tax preparation help, its dashboard isn’t its main feature.

Downloadable Tax Forms

TaxBit houses all of the tax information you need under its taxes dashboard. To get tax information, you first create a tax profile that includes your tax jurisdiction, filing status, zip code, and estimated annual income.

Once you create a tax profile, your dashboard breaks down short-term capital gains and losses, long-term gains and losses, and total income for your chosen tax year. You can also choose three different cost basis methods:

• First In First out (FIFO)
• Highest In First Out (HIFO) by Exchange
• HIFO Universal

FIFO is the default cost basis method most taxpayers use, but having flexibility is a perk since some cost basis methods are less conservative than others.

Finally, and most importantly, TaxBit has downloadable tax forms that it automatically creates using your transaction information:

• IRS 8949: This is for sales and dispositions of capital assets. TaxBit calculates your sales proceeds and any capital gains or losses for you.
• Income Report: This file is a CVS export of all income transactions for a given tax year. Income includes sources like mining, staking, referrals, crypto rewards, and airdrops.

TaxBit also supports all variations of 1099 forms for crypto. Typically, if you earn $600 or more in a year from sources like staking or interest, you’re issued a 1099-MISC form from that company. So, if you’re staking crypto with Coinbase or Celsius and get a 1099-MISC, TaxBit lets you automatically create this tax form as well.

Overall, you should be able to import your transaction data, click a few buttons, and get ready-made crypto tax forms with TaxBit.

Tax-Loss Harvesting And Tax Optimization

TaxBit has a Tax Optimizer Tool that helps you trade with tax implications in mind and potentially benefit from tax-loss harvesting. This tool isn't available on the Free or Basic plans. So if tax-loss harvesting is something you want to take advantage of, you'll need to upgrade to the Plus+ or Pro plans.

Once you import transactions, the Tax Optimizer Tool outlines your individual holdings and three pieces of data:

• Market price of your individual holdings
• Total cost basis of each holding, which is the price you bought your crypto at
• Unrealized positions, which highlights gains or losses you could realize by selling each holding

Clicking on a specific coin brings up an option to optimize losses. This is TaxBit’s tax-loss harvesting tool that can potentially offset capital gains. Basically, the tool highlights how much of a capital loss you can realize by selling a particular asset.

Tax-loss harvesting is useful for cryptocurrency investors because it helps offset capital gains so you pay less in taxes. The idea is to sell off certain crypto to realize losses and to then repurchase similar cryptocurrencies to maintain the same portfolio composition.

Investors use tax-loss harvesting for regular stocks as well. However, if you’re a frequent crypto trader and have a sizable portfolio, this strategy can offset up to $3,000 of regular taxable income.

DeFi Support

One of the main drawbacks of cryptocurrency tax software today is that many offer limited support for decentralized finance (DeFi) transactions.

In other words, if you use decentralized exchanges (DEXs) to buy, sell, swap, or stake crypto, most tax software won’t import that transaction information natively. This means you have to manually enter DeFi transactions which can be a nightmare if you’re using several protocols.

Currently, TaxBit is expanding its DeFi support and has some basic functionality. According to its website, you can sync any transfer, trades, or approvals if it involves ERC-20 tokens on the Ethereum network or BEP-20 tokens on the Binance Smart Chain (BSC) network.

In simpler terms, you can connect an ETH or BSC wallet to your TaxBit account for it to sync transactions. This means popular wallets like MetaMask are on the table.

On its exchange integration list, TaxBit also states it supports DEXs like PancakeSwap and SushiSwap. However, I can’t find any DEXs in my integration options. Granted, DeFi support is currently in Beta, so it seems like this feature isn’t currently available for every user.

TaxBit Plans & Pricing

TaxBit's Free plan is currently the most expansive in the industry. But if you need to import transactions from a non-TaxBit-Network platform or you want to use certain advanced features, you'll need to choose from one of three paid plans:

Each of the paid plans have 14-day free trials.

While TaxBit's Free plan is great, it's Basic plan is very lackluster and is only useful if you’re willing to pay $50 to create tax forms from platforms that aren't supported TaxBit Network companies. To get the most use out of TaxBit, you’re likely going to need to pay for Plus, which is $175 annually.

The Pro plan offers one unique feature which is a CPA review. This lets you schedule one phone appointment per year with a TaxBit CPA to go over your tax forms to ensure they’re accurate. There isn’t a time limitation for your consultation.

TaxBit Alternatives

TaxBit states that it’s the number one crypto tax software. And with the launch of the TaxBit Network and its unlimited Free plan, it's taken giant strides towards making that claim a reality.

But if you want cheaper access to tax-loss harvesting or want more DeFi support, you might want to consider alternatives like CryptoTrader.Tax or ZenLedger. Here’s a quick look at how TaxBit stacks up against the competition:

Account Opening Process

You sign up for TaxBit through Google or by entering your email and password. Once you sign up, you need to start a free trial for a paid plan.

This means entering your credit card information at sign-up. You don’t pay if you cancel before the end of your trial period, but keep this requirement in mind.

All in all, opening a TaxBit account should take a few minutes at most. You have to enter your Zip code and some basic information when adding a tax profile to your account, but you don’t complete KYC requirements to use TaxBit.

Safety & Security

TaxBit markets itself as a "security-first" company. Its software has been independently SOC 2 certified and the platform has read-only access to transactional information.

You just sign up with an email and password. You don’t provide information like a SSN, your address, or phone number.

TaxBit also states it encrypts its data and it never has access to your funds because of this read-only data protocol. We love that TaxBit has placed a strong emphasis security and is actively working to stay ahead of hackers and identity thieves.

TaxBit Customer Service

TaxBit has a technical support FAQ and also lets you submit support tickets through its Help Desk. Furthermore, you can use a live chat bot to ask questions or use the chat feature to chat directly with a representative.

Finally, you can email TaxBit at [email protected] According to its website, you should receive an email response within 24 hours. Business hours are 7:00 AM to 7:00 PM (MDT) during the week and 8:00 AM to 5:00 PM (MDT) during the weekend.

The fact that Pro users don’t get priority support or phone support is one downside of TaxBit. However, TaxBit has relatively in-depth support documents and a technical FAQ which slightly makes up for this.

Is TaxBit Right For You?

TaxBit helps you quickly download tax forms so you can accurately file crypto taxes. If you’re generating capital gains from trades or additional income from sources like mining or staking, you’re likely to benefit from free software like TaxBit.

TaxBit may not be the best option if you use a platform that isn't part of the TaxBit Network or you need tax-loss harvesting support. However, if you qualify for it and it's all you need, TaxBit's Free plan is hard to beat.

TaxBit Features