Crypto is fast becoming more accepted as a legitimate investment, but like anything where you can turn a profit, it comes with tax obligations. Compared to traditional investing, crypto comes with its own unique challenges when it comes to taxes; we know, we’ve been there! Its volatility and introducing new products to your portfolio conspire to make calculating your taxes feel overwhelming.
Traditional investing has a plethora of well-established software and websites that keep your transaction records, calculate profit and loss, and generate reports come tax time.
Although the requirements are the same as traditional investing in the crypto sphere, there are fewer options available for crypto investors to keep track of their records for taxation purposes; however, they’re becoming more numerous and more sophisticated as crypto gains popularity.
We ran a test on one of the most popular programs, Coinpanda, to see if it can simplify the crypto tax process. We examined Coinpanda’s features, pricing, and user experience so you can decide if it’s the right program for you.
What Are Coinpanda’s Features?
Your tax obligations are going to vary with where you live, as is what records you have to keep and what you can write off.
Based in Bulgaria, Coinpanda can generate tax reports for over 65 countries, including the U.K., U.S., E.U., and Australia. If you don’t live in a supported jurisdiction, Coinpanda has features that could still be helpful when filing your taxes, including:
Data import
Coinpanda imports data through direct API connection or CSV/XLSX files and supports 800+ cryptocurrency exchanges and wallets. Direct import eliminates the chance of human error, but there are two manual upload options for when that’s not possible:
- Download a template from Coinpanda, populate it, and then upload the completed file.
- Manually enter your data directly into the platform.
We found directly importing our data to be smooth and relatively quick.
However, manual entry was time-consuming, and we wouldn’t recommend it for more than ten transactions.
Transaction categorization
The platform automatically categorizes imported data into six categories: bought, sold, traded, transferred, received, and sent. This feature saves time and we found it accurately sorted our transactions. However, for those who need more nuance when classifying trades, such as a “sent” transaction being a gift or donation, Coinpanda allows a manual edit.
Tax calculations
Coinpanda automatically calculates your capital gains/losses. It also allows you to calculate your tax using different methods (for example, FIFO, LIFO, or HIFO) to see your tax bill before filing, letting you choose the most cost-effective method of reporting.
Reporting
Coinpanda can produce reports that are compliant with your tax authority (for example, the IRS, HMRC, or ATO) in under 20 minutes. The platform allows you to review and adjust your data after input, ensuring your report accurately reflects your tax liabilities. It also allows you to export your data to other tax software like TurboTax and TaxAct, keeping all your tax records in one place.
Security
The platform encrypts your data for storage and transmission. It also requires two-factor authentication when logging in. Coinpanda continuously monitors the site for any potential security threats or abnormal behavior.
What Is Coinpanda’s Pricing?
Coinpanda offers a flexible pricing structure that meets the needs of a wide range of cryptocurrency investors. Its free plan is ideal for beginners or those for whom crypto makes up a small percent of their investment portfolio.
After the free plan, which includes up to 25 transactions, there are three paid tiers:
Hodler: Priced at $49 per tax year, this plan supports up to 100 transactions.
Trader: For more active investors, this plan costs $99 per tax year, allows up to 1,000 transactions, and gives you access to live chat support.
Pro: At $189 per tax year, this plan allows over 3000 transactions, gives you priority support, and lets you import custom files.
If you choose a plan but find you need more transactions than your plan allows, you can upgrade your plan and pay the price difference. For those who have over 20,000 transactions a year, Coinpanda offers customized solutions.
Coinpanda’s Ease of Use and Functionality
We found the interface simple and uncluttered, the menus easy to find and straightforward, and navigating the site simple and intuitive. We thought the platform as a whole was beginner-friendly and its features suitable for beginners and experienced traders alike.
It’s worth noting that some users have reported occasional glitches with tax reports requiring manual adjustments, but we didn’t experience any such issues in our testing. While some users with very large transaction sets have reported slightly longer wait times, this wasn’t a factor in our tests.
Conclusion
After testing the platform, we believe Coinpanda is a valuable tool for simplifying the tax filing process. Automatically categorizing our transactions and generating reports significantly reduced the time and effort needed for us to prepare the required documents, and we were confident in their accuracy.
We found the user interface intuitive and easy to navigate, and we believe even those less familiar with accounting software than us could find their way around the platform with very little practice. Connecting our wallets and exchanges to Coinpanda was quick and straightforward, allowing us to import and organize our data efficiently.
However, we’re not convinced that Coinpanda is the right platform for all traders. While it excels at handling basic transactions, users with more complex portfolios involving staking rewards or DeFi activities may need to adjust their data manually, which gives human error a chance of creeping in. No tax collector is known for forgiving a simple error; accuracy in bookkeeping Is of paramount importance. We think Coinpanda would benefit from adding live chat to the first two tiers, and the waiting times for a response to email inquiries were occasionally too long.
But overall, Coinpanda is a user-friendly, efficient platform for managing your cryptocurrency portfolio and preparing your taxes, and we’d happily recommend it to many of our fellow crypto investors.
