Crypto taxes are a fluid topic as more and more country regulators come to grips with it.
Right now, countries that have somewhat regulated this field are tax-wise usually treating cryptocurrencies the same way as gold or real estate.
This means that every purchase or selling of cryptocurrency is a taxable event which is known as a Capital Gains Tax and has to be paid in most countries such as the USA, UK, Canada etc.
This Koinly review will go over the platform’s major features, pros and cons, its position relative to its main rivals etc.
Without a further ado, let’s move to the first chapter of this Koinly review by looking at that Koinly is and how does it work.
What is Koinly cryptocurrency tax app?
Koinly is a crypto tax calculator that helps with creating a tax report based on your trading, mining, staking, airdrops activity. It is suitable for both individual crypto traders as well as business or professional accountants that have cryptocurrency investors as clients.
Koinly is a hands-off approach – you just need to connect your exchanges, wallets or other services via API keys to the Koinly app and it does the rest.
It will automatically import your transactions, calculate all the market prices at the time of your trades, match transfers between your own wallets (so you don’t pay taxes on these transfers), calculate your crypto gains/losses and generate your tax reports!
How does Koinly crypto tax app work?
Koinly is like an Excel sheet on steroids. It can do a lot of calculations, quickly and accurately.
First thing you need to do is to import your transactions into the app. You can do that by getting API keys from your wallet or exchange and adding them to Koinly. Or you can do a CSV export from a wallet or exchange and import that CSV into Koinly.
Koinly supports all kinds of crypto activities, not only spot trading. It recognizes and calculates needed info from your mining, staking, margin trading, lending, borrowing activities. It is a real swiss-knife for crypto taxes.
Next step is to check all calculations to make sure everything is imported correctly. You can have this overview for free. This equals to a classic portfolio tracker app that gives you oversight of your crypto holding across different platforms and services.
Final step is exporting tax reports generated by Koinly (you will need to buy one of the offered packages in order to do this) and filing your taxes, either manually or using a tax software like TurboTax. Koinly can generate different tax forms, like Form 8949, Schedule D. If you are filing in the US, Koinly can generate filled-in IRS tax forms.
If you would have bet on the right coins this year you could easily have 10xed your capital…
You could even have made as much as 100x which means you could have turned $100 into as much as 10k.
Experts believe this will happen again in 2022, the only question is which coin do you bet on?
Our friends from WhaleTank are on top of it, working non-stop to find the best gems one can buy on the market.
Click here to test them out by joining their Telegram group.
What tax reports can you make with Koinly?
Koinly is complies with all the applicable tax laws in a host of different countries. Some of the methods and tax forms they employ are:
- Multiple cost-basis methods. You can choose between FIFO, LIFO, HIFO, Average Cost, Share Pooling & Spec ID. This method defaults to the recommended method in your home country.
- Smart transfer matching. Koinly can detect crypto transfers between your own wallets by using its own AI methods
- Form 8949, Schedule D. For US taxpayers, Koinly can generate all the forms you need to file your crypto taxes.
- capital gains & margin trading summary – overview of your cryptocurrency taxable gains and income incl. Margin trades, options and futures.
- income report – Koinly can create a statement with all your Airdrops, Forks, Staking Rewards, DeFi and other income transactions.
- gifts, donations & losses report – you can easily tag your outgoing transactions (that you gifted, donated or similar) and get a nicely formatted report.
Supported wallets, exchanges and services on Koinly
Koinly absolutely dominates this criterion with its integration with, essentially, every crypto platform, wallet, exchange, service under the sun.
It supports more than 350 exchanges, more than 50 wallets, over 6000 different coins and more than 10 diverse crypto services (like lending platforms, cloud mining platforms etc).
Countries supported on Koinly
Koinly has a long list of supported countries that is still work in progress as they add new countries regularly. Below is a graph with supported countries:
Types of transactions supported on Koinly
As we mentioned earlier, Koinly is not only for spot trading but rather a comprehensive tool that recognizes various types of crypto transactions:
- Automated data import. link up your accounts via API, add your BTC wallets using x/y/zpub keys and ETH tokens with your public address
- Margin & Futures trading. For thos who traded with margin on BitMEX, Binance, Kraken or any other of our supported exchanges?
- Staking, Lending & DeFi. For thos who have been using bitcoin lending platforms such as Blockfi, YouHodler, NEXO, Compound, Celsius etc?
- Smart transfer matching. Koinly uses AI to detect transfers within your own wallets and excludes them from tax reports
There are 4 different pricing packages on Koinly – one free and 3 paid.
The main difference between the paid packages is in the number of transactions you can import. while all other features are the same and offered for all paid pricing models.
Koinly – Free account
Koinly has a free account that you can use as a portfolio tracker and it allows you to create all tax reports like paid versions, except you can’t export them in a ready-made format for filing.
In comparison to paid versions, free Koinly account has no support for Form8949, Schedule D, internation tax reports, export to TurboTax and other tax tools and it limits your integration to only 50 exchanges/wallets. It also doesn’t offer support for DeFi, margin and futures trades.
How to set up Koinly?
Step 1. Add your wallets
Wallet in Koinly ecosystem represents a container for all your transaction from one exchange or actual crypto wallet. It shares the name with cryptocurrency wallets but functionally, it is a different thing.
To start with Koinly, you create one such wallet for, say, one of the exchanges you were trading on.
To add a new wallet, navigate to the Wallets page and tap on Add Wallet. There you can choose your wallet (exchange, wallet or service) by searching for it or finding it in the list.
If the service you used doesn’t exist in Koinly yet, you will see the option to create a custom wallet as seen below.
Step 2. Import transactions
After you click on the wallet icon, you will be able to select importing method for your transactions.
For most exchanges listed on Koinly, you will have a Setup auto-sync option which uses API keys to download your transaction history and keep your data in sync even in the future.
In the event that you can’t find this option or prefer to import using csv files, you can do that too, by selecting Upload CSV files.
Clickone the following link to read detailed instruction on how to import all your wallets and transactions for an accurate tax report.
Step 3: Let Koinly calculate your gains
After your import is finished, Koinly gets down to work of crunching numbers. First thing it does is fetching market prices, matching transfers between your own wallets and calculating your capital gains.
They way these taxes are calculated vary from country to country and Koinly uses different cost basis methods such as FIFO, LIFO, ACB etc.
Step 4: Downloading your tax reports
After Koinly is done with calculating your gains, a small notification will pop up asking you to Refresh your page.
Hit refresh and then go to the Tax Reports page to see a brief overview of your capital gains and income. You do not need to buy a Koinly paid plan to view the summary, however you will need to shell out for one if you want to download it.
Koinly provides a number of tax reports for download in csv, excel and pdf formats.
Find a Cryptocurrency Tax Accountant via Koinly
Koinly helps you find a certified tax professional specializing in cryptocurrency taxes to help with your tax reports. They currently list 2 CPAs from USA and 8 from Ireland but the process of onboarding new tax professionals is continuous so the list will most probably grow with time.
Is Koinly legit and safe to use?
Koinly is a legit business but even if it wasn’t the case – risk of losing your funds to hacker attacks because you used Koinly is zero. Koinly does use your API keys to read data from your exchange, but that is about it – it doesn’t have the ability to trade or withdraw anything from your account. By extension, that same option is not available to a potential hacker that would corrupt Koinly platform.
So, is Koinly Safe? In a word – yes, Koinly is perfectly safe service to use.
Koinly as a cryptocurrency portfolio tracker
Koinly allows for a universal or Wallet-based cost tracking. You can keep track of your costs in a universal pool shared across all connected wallets or separately for each wallet.
Koinly vs competitors
Main competitors of Koinly are listed below. We reviewed all of them and can safely say that crypto tax tools are a neck and neck race with all tools following each other in a lockstep when it comes to features and pricing.
Koinly is a great app – it will streamline your crypto tax activities by collecting all relevant data, calculating and presenting it in a neat, concise, IRS-ready format.
Vast number of supported exchanges and wallets + newer crypto services like lending or cloud mining platforms separate it from its main rivals.
Prices are a bit steeper than with competition but you do get more out this app, especially if you did a lot of advanced crypto activities like margin trading or borrowing/lending.
Still, should Koinly fail to win you over, here are complete reviews of its top challengers:
CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com