Koinly Review

July 4, 2022
Technology
1 0
Koinly Review

What is Crypto Tax Software?

The number of people investing in cryptocurrencies is increasing rapidly, due to the fact that it can make you a millionaire or even a billionaire in just a little time, the past is evidence, but it can be difficult to pay taxes on transactions made on crypto exchanges.

Most likely, if you are an investor in cryptocurrencies, you would do a number of transactions in a year, but keeping a record of these transactions and then determining net profit and loss is not always possible.

Crypto tax software, which automatically synchronizes across crypto exchanges and wallets, calculates your capital gains and losses and generates final tax reports that can be used for filing your taxes, can be of great assistance.

What is the work of Crypto Tax Software?

Crypto tax software acts as third-party data aggregators, and users can buy an annual subscription to connect crypto exchanges, wallets, addresses, etc. The software then balances the transactions and produces detailed gain and loss statements that comply with the IRS guidelines.

Factor To Choose The Best Crypto Tax Software

Before choosing your preferred crypto tax software you must consider a number of items, here I list some of them.

1. Integrations & Bandwidth

When selecting a crypto tax software, the number of integrations should be the most important aspect to consider. There are two types of integrations in Koinly, they are

  • API (Application Programming Interface) import and
  • CSV (Comma Separated Values) import.

Using a custom API to import your wallet and exchange data into a tax platform is the easiest and most accurate way to do this, though the process may sound very technical. The crypto tax software platform downloads and reconciles all transactions automatically once you have copied and pasted the API key from your exchange/wallet and pasted it on the platform.

CSV imports are a little tedious and time-consuming, as they require downloading the transaction history report in CSV format and uploading it into the crypto tax software.

2. Credibility & Legitimacy

Since crypto tax software is a new area, ensuring that the software you use is reliable and legitimate is critical. At the end of the day, you will be responsible for the amounts reported on your tax return, so it’s important to do your due diligence when selecting a software company.

One factor to consider is the team behind the platform, especially if they have members from the tax compliance/regulatory space. For instance, teams consisting of only technologists may lack the tax experience necessary to navigate this murky space. Ask the platform (or search on Google) about the collaborations they have with the IRS and other regulators.

3. Price

Price may be your biggest consideration, but remember that a small premium for better integrations, bandwidth, and reputation is well worth the cost. For most platforms, the pricing structure depends on the number of transactions you make in a tax year.

If you meet these criteria, consider taking advantage of platforms that offer a free account. Be prepared to pay more for items that are likely to be complex.

Considering every topic we have touched on already above, you may be wondering what the best crypto tax payment software is, hence I have brought to you Koinly, which is one of the best and most used crypto tax payment platforms.

Here We Start Koinly Review!

What is Koinly?

Koinly is a cryptocurrency tax calculation software that is intended to make the computation of your cryptocurrency tax burden easier by automating a large number of the processes involved in making these calculations.

Koinly

Photo Credit: ICAEW

Basically, Koinly allows you to import your transaction data from wallets and exchanges (such as Coinbase and Binance) and classify each transaction into taxable and non-taxable transactions.

Once you’ve grouped all your transactions (most of which will be automated for you), tax forms will be generated, which you can either submit to your accountant or export to Turbotax.

Koinly Features

Koinly Crypto Tax Software

Photo Credit: Koinly

To give you a complete picture of what you’ll find most useful, as well as which features could stand to be improved, I have carefully reviewed Koinly’s capabilities and what it has to offer.

1. Supports a Good Number of Cryptocurrencies

Koinly supports over 6,000 cryptocurrencies and also provides more than 6 years of historical crypto and fiat spot price data so that you can verify that all your calculations are correct. This will also give you a brief rundown of the crypto history and also a clearer picture of what the future holds for cryptocurrency.

This cryptocurrency tax software generates automatic tax returns on a number of forms, including Form 8949 and Schedule D. It also offers a tool for warning users about errors, so you can search for and correct missing or duplicate transactions.

2. Multinational Support

International tax reports, which are an excellent option for anyone submitting their taxes outside of the United States, are also available through Koinly, which supports more than 100 countries beyond Forms 8949 and Schedule D.

Some of the cost basis methods used to calculate Koinly’s tax returns can be applied to any country. You can use the most appropriate cost-based method for your needs based on your location and local currency.

3. Extensive Service Integration

It integrates with 350 exchanges, 50 wallets, 11 services, and more than 6,000 blockchains to keep track of all of your crypto transactions, ins and outs, including lending, mining, trading, and airdrops.

Koinly’s integrations are quite impressive, and they should make your transactions and wallet transfer a lot easier to follow. It has a versatile interface, including a touchscreen, for posting content and creating comments.

It provides information on crypto exchanges and your crypto gains and losses across multiple platforms. This platform also supports TaxAct and TurboTax Online, so you can download your capital gains and import them into the software for streamlined filing.

4. Importation of Data

Koinly lets you import data from a variety of exchanges to provide you with a clear view of your transactions, wallet transfers, and portfolio. If your exchange isn’t listed, you can download your reports in a CSV file or Excel format and import them into the platform.

I found this feature incredibly useful to keep track of all your crypto activities, including mining, trading, lending, staking, DeFi activities, and more. What I really liked was that Koinly distinguishes various kinds of transactions and sorts them accordingly.

And if you’re wondering if Koinly is safe, keep in mind that it uses a read-only API connection so that it can’t make changes to your exchanges or wallets. Nevertheless, when configuring API connections, it is important to disable the ability to trade and withdraw funds; it does not store your credit card information.

5. It Has a Free Account Option

A free account can be created and used for an unlimited period to keep track of your portfolio, but downloading automated tax reports is not included in this option. The free account comes with 10,000 transactions and features that allow you to keep track of your investments, gains, and losses.

6. Comprehensive Resources

Koinly also offers a Crypto Tax Guide and a Discuss area on their website, which users can use to communicate with other users. Many Koinly reviews, and I agree, claim that the resources available are useful and thorough enough to provide clear information on cryptocurrency and tax filings.

7. Customer Support

The team has a support section and FAQs page with responses to the most frequently asked questions. They can be reached via email and live chat, and they have Facebook and Twitter pages.

8. Others

Apart from gain/loss reconciliations, some crypto tax payment software platforms also offer other perks, such as portfolio tracking, educational webinars, tax planning tools, and so on.

Platforms also offer the ability to invite your accountant to view your account without sharing your username and password, which is both convenient for your accountant and excellent for privacy. Your accountant will love this feature, and you will save money by saving time.

Koinly Pricing

Koinly provides a number of plans designed to cater to crypto traders of different activity levels.

PlanPrice (per year)What it comes withRecommended for
Free$0.00Unlimited transactions, but there are no tax reports, cost analysis, email customer support, and custom file import.Investors who only want to monitor their transactions without the automatic tax reports usage.
Newbie$49.00100 maximum transactions with all the features, but there is no email support.New investors or those with not many transactions and on a budget.
HODler$99.001,000 maximum transactions, tax reports, and other features.Investors with more than 100 transactions
Trader/Pro$179.00/$279.00Between 3,000 to 10,000 transactions with all features including email support.People with a lot of transactions and in need of dedicated support.

The Free Plan

Koinly offers a free plan that can be used extensively, is able to track trades and transactions, exchange and wallet accounts, and can also prepare capital gains tax estimates. The free account also provides access to FIFO and LIFO tax reports, and can be used to contact the company’s support staff via live chat.

The Newbie Plan

This plan is good for lower-income investors because it offers a variety of features at an affordable price. Auto-generated tax statements and the import of custom files are included with this plan, which costs $49 per tax year.

The HODler Plan

This plan can be used to create FIFO and LIFO tax reports, as well as international tax returns, complete audit reports, Form 8949 and Schedule D reports, as well as TurboTax and TaxACT, but you are limited to 100 transactions.

The Trader Plan

The Trader account costs $179 per tax year, and it offers you all the features and a transaction limit of 1000. In addition, prior support is included when signing up for this plan. You can opt for the Pro version though, which gives you 10,000 transactions for $279.

Koinly is one of the most popular cryptocurrency tax solutions today because of its affordability and ease of use. The solution can generate full tax returns in less than 20 minutes and easily connects to all of your wallets, blockchain addresses, and exchanges.

Koinly combines insights from across your entire trading portfolio to allow you to file accurate tax returns and gain a greater understanding of your wealth-building potential. You can easily sync all of your crypto transactions in one place and track how much you’ve spent.

With Koinly, you can even spot unforeseen errors in your returns, such as double entries.

Koinly Pros and Cons

Like any other product, Koinly has a number of drawbacks. But still, the pros might outweigh the cons for most users.

Pros

  • It offers affordable plans.
  • Koinly integrates a good number of exchanges and wallets.
  • It supports international tax filing.
  • It has a free version.
  • Tax reports can be delivered in less than 20 minutes.
  • Koinly is available in more than 20 countries.
  • It supports over 6000 cryptos and 350 exchangers.
  • It has good documentation for how to set up connections between every single exchange.

Cons

  • It doesn’t have any independent tax-loss harvesting tool.
  • Tax reports are not included in the free plan, so you have to get a paid plan for this.
  • Koinly doesn’t support payment in crypto.
  • Since a “free” account can’t download tax forms, it’s not really free.
  • No other features beyond tax preparation
  • The user interface can be a little confusing sometimes.

How to use Koinly?

Signing up is very easy, and the main site shows a Signup button in the top right-hand corner of the page.

  • You can sign up by using a Coinbase or Google account, or by entering an email address and password combination.
  • You can also choose to track your portfolio or your location for tax tracking.
  • From there, you can access the main dashboard and manage your exchange accounts and wallets.
  • From the “Settings” tab, you can modify your account as you like to include the correct tax-reporting information for your jurisdiction.

How to import data to Koinly?

On Koinly’s import page, you can see all of the exchanges and wallets from which they accept funds. The list is large, and they will add more if you ask. To import your data, you must either upload a CSV file of your transactions or use the platform’s API permissions. Koinly, thankfully, makes this simple with excellent documentation for each exchange and wallet they support.

Once all your accounts have been connected, click on the little checkmark icon in the top right corner. Because the icon is so small, I found the user interface a little confusing, and I spent a few minutes trying to figure out where to go next. If you ask me, the UI could use some improvement.

How to review transactions in Koinly?

After you have finished importing, you can review all the transactions on the Transactions page. In my case, there was no missing data, but I’ve seen youtube videos that show an icon on a transaction to tell you what needs to be adjusted. Once all of your transactions look good, it’s time to generate your reports and tax forms.

What is the Tax Report in Koinly?

On this tab, you can see how simple and clear everything is. Just the right amount of information is presented so that nothing is unclear, but not too much information so that one gets lost. This is where Koinly’s UI is pretty good: it is very obvious when something is wrong or missing. To change the accounting method, you would have to access the Finance page, but the options are limited.

Koinly App

Due to users’ popular demand, Koinly brought out a mobile application for the platform; the Android app and the iOS one, though the iOS app is still in its beta stage, we can surely expect a full app sooner rather than later.

You can download the Android app here

And the iOS app here

Is Koinly Safe?

The Koinly team places value on customer trust and the security of user data, and it employs a variety of security protocols to prevent any exploits or breaches. Koinly does not require your private keys or gain access to funds on your exchange accounts.

Typically, though, it is best to disable withdrawals and trading when configuring API connections. All API/blockchain keys are encrypted using AES-256-gcm before being stored, and the website is completely accessible over SSL, with all data sent to or from Koinly encrypted with 256-bit encryption.

Koinly also depends on Amazon Web Services (AWS) and Heroku for data storage and hosting. AWS is a leader in secure hosting, and Heroku is a secure cloud application platform that isolates customer applications and data.

Koinly makes password storage unnecessary by allowing users to register and authenticate via Google/Coinbase, and anyone signing up via email has their passwords stored using bcrypt.

The team continuously scans for vulnerabilities and ensures that data access is restricted to authorized employees only. As always, keeping your data safe and using your information wisely will also go a long way in preventing data breaches.

Why Koinly is One of The Best Crypto Tax Software?

Koinly is a crypto tax software for companies and individuals for local and international filing and tax calculations, as it can connect easily to all of your wallets, exchanges, blockchain addresses, and services, giving you a clear picture of your invested money across different platforms.

It also simplifies the tax calculation process by calculating the tax that is due on your crypto exchanges, and you can easily export the results to other tax software. Koinly is also presented as a pleasant cryptocurrency tax software in the user reviews.

FAQs

Q. What is Koinly?

A. Koinly is a web-based crypto tax platform that lets you keep track of all of your crypto transactions and produce regulatory-compliant tax returns. It lets you integrate your wallets, track trading, mining, staking, lending, and airdrops, and simplifies the process of recording the details.

Q. Is Koinly easy to use?

A. Yes. It’s very intuitive and there are plenty of resources on the platform to help you set up your dashboard to give you a complete overview of your transactions, gains, and losses. If you know your location and currency, you can download your crypto tax report by adjusting a few settings.

Q. Which country does Koinly work in?

A. Koinly supports more than 100 countries over multiple continents, and the platform and several Koinly reviews assert that it can help with tax returns in any country that uses some of the supported cost basis methods.

Q. What payment options does Koinly accept?

A. It supports Visa, American Express, and Mastercard, so you can use any of these mediums to pay for your subscription.

Q. Is Koinly legit and is it safe to use?

A. Koinly employs several security protocols to safeguard user data. It utilizes APIs to gain access to your account rather than private keys. You can easily change API settings and disable any feature you deem to be too risky. Koinly encrypts API keys before saving them. I searched the Internet and found no citations that link Koinly with data breaches.

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