Cryptocurrencies have united four main categories of market participants: investors, traders, miners, and scammers. As digital assets gain popularity, tax authorities have begun showing increasing interest in the crypto community, requiring users to declare income and pay taxes.
“In this world nothing can be said to be certain, except death and taxes,” said Benjamin Franklin. And in the era of cryptocurrencies, this phrase sounds especially relevant.
If you trade or invest in cryptocurrency, you are obligated to pay taxes on the income received. Ignoring this requirement can lead to serious consequences. But where to start? How to understand which operations are taxable and which are not? And what tools will help calculate everything correctly?
In this guide you will find:
- Why it’s important to consider taxes when working with cryptocurrency;
- Which crypto operations are considered taxable and which are not;
- How to calculate the tax amount you owe to the state;
- Overview of the best tools for automating tax accounting;
- Features of taxation in the UK and other countries.
Why Worry About Cryptocurrency Taxes?
Tax rules regarding cryptocurrencies are already clearly established in countries like the US, UK, Australia, Japan, and France. In these jurisdictions, cryptocurrency is considered property or income, which means it’s subject to taxation.
Which Crypto Operations Are Taxable?
The following actions are generally considered taxable in almost all countries with crypto market regulation:
- Selling cryptocurrency for fiat (USD, EUR, GBP, etc.);
- Exchanging one cryptocurrency for another;
- Using cryptocurrency to pay for goods or services;
- Receiving cryptocurrency as payment for work or as a result of mining.
Which Operations Are NOT Taxable?
No tax is charged in the following cases:
- Transferring cryptocurrency between your own wallets or exchanges;
- Buying cryptocurrency with fiat money;
- Giving cryptocurrency as a gift to family or friends;
- Donating cryptocurrency to a charitable organization with tax-exempt status.
How to Calculate Tax Amount?
The tax amount depends on the type of operation and the asset holding period. In the US, for example, capital gains tax is applied, which is divided into two types:
Short-term Capital Gains Tax
Applied if you sold an asset less than a year after purchase. The rate depends on your total income and status (single/married/head of household).
Long-term Capital Gains Tax
If you held the asset for more than a year, the rate will be lower — the system encourages long-term investments.
Tip: use the tax-loss harvesting function (reducing the taxable base through loss-making trades) to legally reduce tax.
Cryptocurrency Taxation in the UK
In the UK, two types of taxes are applied:
- Capital Gains Tax — when selling or exchanging cryptocurrency;
- Income Tax — if you receive cryptocurrency as payment for services or through mining.
If your total income from crypto operations doesn’t exceed £12,500 per year — you’re exempt from paying taxes. With income from £12,501 to £50,000, the rate is 20%.
Top 6 Tools for Calculating Crypto Taxes
To avoid hiring an accountant and spending hours on manual calculations, use specialized software. All listed services allow automatic data import, report generation, and downloading in the required format for tax filing.
1. TokenTax
- Support for TurboTax and other accounting systems;
- Automatic import from exchanges and wallets;
- Tax-loss harvesting function for tax optimization.
2. Koinly (Recommended)
- Support for more than 300 exchanges, 68 wallets, and 6000+ assets;
- Generation of country-specific tax forms (Form 8949 for USA, K4 for Sweden, etc.);
- Ability to download ready reports in PDF, CSV, or Excel.
3. CoinLedger
- Integration with Coinbase and TurboTax;
- Support for margin trading;
- Simple interface for beginners.
4. Koinx (for Indian users)
- Full support for Indian exchanges: CoinDCX, CoinSwitch, Binance, etc.;
- Accounting for 1% TDS (tax at source) under Indian legislation;
- Ability to create and download reports for current and past financial years.
5. ZenLedger
- TurboTax partner;
- Tools for accountants;
- Automatic generation of forms 8949 and Schedule D.
6. CoinTracker
- Support for USA, Canada, UK, and Australia;
- Integration with Metamask and other DeFi wallets;
- Ability to track portfolio in real-time.
Do You Need an Accountant After Calculating Taxes?
Actually — not always. Modern tools allow you to independently prepare all necessary documents:
- In the US — IRS form 8949 and Schedule D for declaration 1040;
- In other countries — similar forms that can be downloaded directly from the application.
Main thing — collect data timely and use verified software.
Do You Already Calculate Taxes on Cryptocurrency?
Share in the comments:
- Do you calculate taxes on crypto assets?
- What software do you use?
- Do you know the taxation features in your country?
Don’t forget to download the tax report on time — it will save you not only money but also nerves!
