Cryptocurrencies: a capital gains tax calculator
Cryptocurrencies: a capital gains tax calculator
Crypto

Cryptocurrencies: a capital gains tax calculator

By Marco Cavicchioli - 15 Jul 2020

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There are some software programs that can be used as tax calculators for paying taxes on profits generated with cryptocurrencies

The first thing to note, however, is that each country has its own legislation in this area, so before using them it is necessary to make sure that they are compatible with the tax regime of one’s own country, and that they are up to date with the latest changes in this respect. 

It is also important to remember that under no circumstances should anyone disclose the seed of their wallet, or the private keys of their public addresses, to anyone, not even to software other than those known and widely analyzed for managing crypto wallets. 

In fact, whoever owns those seeds, or those private keys, has full access to the funds stored on their public addresses, and can therefore dispose of them at will. 

The taxes deriving from income generated with cryptocurrencies are calculated on the basis of the capital gains or losses deriving from the sale of digital assets. This is done in a similar way to how taxes are calculated on any capital gains obtained from the purchase or sale of shares, or from the sale of a house. 

In order to carry out the calculation correctly, it is necessary to keep track of all transactions involving the purchase or sale of cryptocurrencies, regardless of the methods and platforms used to carry them out. 

In other words, it is necessary to have a complete history of all these transactions for all the years in which they have been carried out, and for each purchase or sale it is necessary to have the amount of the cryptocurrency or token purchased, their fiat currency exchange rate at the time of acquisition, the date of acquisition, the amount of the cryptocurrency or token sold later, the fiat currency exchange rate at the time of sale, and the date of sale. This is for each purchase or sale transaction. 

The calculation starts from the recording of profits or losses deriving from the difference in exchange rates at the time of purchase and sale, and applies the tax rates established by the law of one’s own country. 

One of these tools is the Crypto Tax Software from tokentax.co, but there is also the crypto tax calculator from coinpanda.io. 

Another is koinly.io’s Crypto tax reports, which promises tax calculation in about 20 minutes, and for more than 20 countries. 

There are also the special websites bitcoin.tax and cryptotrader.tax, while probably one of the most complete, with video tutorial, is cointracking.info

There is not a single software that can do these calculations for all the countries in the world, so it is often necessary to examine more than one before finding the one that will do the job. 

Furthermore, although tax regulations on financial capital gains do not change very often, it is always necessary to make sure that the software one decides to use is up to date with the latest regulations. 

Marco Cavicchioli

Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".

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