Using crypto tax calculation software
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 7 min
In short
Where transaction counts are high, calculation software is a sensible choice. But the cost basis setting, the transactions that failed to import and the carry-forward from last year are all things the user has to verify. Automatic calculation does not move responsibility for the return away from the person filing it. This site does not recommend any particular product.
Key points
- Always check which cost basis method the tool is set to
- Verify that the cost basis carried forward from last year went in correctly
- Never leave import-error rows unattended
- Automation does not shift responsibility for the return away from you
Definition
Using software or a service that ingests transaction history and computes crypto gains and losses automatically, for the purpose of filing.
A handful of trades a year can be done in a spreadsheet. Once crypto-to-crypto swaps are involved, several exchanges and wallets are in play, and rewards arrive daily, manual totalling stops being realistic — somewhere past a few hundred entries, software is worth considering. This site names no products and ranks none; check for yourself which exchanges and chains a tool covers and how well it fits Japanese requirements.
The first thing to check when you start is the cost basis setting. The total average and moving average methods give different results for a given year. Which you may use, and whether electing one requires a procedure, is set by the rules, and it is not something to switch freely year to year. Open the settings and confirm it is on the method you intend. See tax-calculation-method, and confirm your own position with a tax accountant.
Next, the carry-forward. Unless the tool knows what you held at the start of the year and at what cost, this year's disposals cannot come out right. If you used the same tool last year it carries over automatically; in your first year, or a year you switched tools, you enter the opening balances yourself. Leaving that blank typically means the tool treats the basis as zero and reports an inflated gain.
During import, always open the error list. Most tools show rows that failed to load or whose type could not be determined. Reviewing them is tedious when there are many, but skipping it undermines the entire result. Resolve each error row either by classifying it manually or by re-obtaining the source data. Exporting a result with errors still outstanding is the most dangerous thing you can do here.
And the most important point last: even when the software calculated it, responsibility for what you file is yours. 'The tool produced that figure' is not an explanation if the figure is wrong. Review the output yourself and be able to account for it before you use it. The specifics of that review are covered in filing-verifying-output.
Watch out for
- · This page is a general orientation, not tax advice
- · This site does not recommend any particular calculation tool
- · Even with automatic calculation, responsibility for the return remains with the filer
Frequently asked questions
Can I file the figure the tool produced as it stands?
Using it unreviewed is not advisable: if something failed to import or a setting was wrong, the output is wrong too. Check it against your closing balances, and where the amounts are significant or doubts remain, have a tax accountant review it.