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On Feb. 11, Blockfolio announced its partnership with TokenTax to help crypto users come tax season. The integration will allow Blockfolio users to import their crypto activity into TokenTax’s automated software.
Preparing for Tax Season
By partnering up with TokenTax, Blockfolio allows users to import transaction data directly into the automated tax software. “One of the biggest time sinks for users is how they get their transactions into the TokenTax system,” said TokenTax co-founder, Alex Miles.
Instead of manually inputting crypto-related transaction data or syncing with relevant exchanges, Blockfolio users who sign up with TokenTax can have all of this information automatically added to the tax filing platform.
Once imported, TokenTax allows users to view their current tax liabilities and generate their tax forms on one platform.
The U.S. government currently identifies cryptocurrencies as assets for tax purposes. Whenever an American citizen buys or sells a cryptocurrency, they must also identify capital gains and losses. Citizens need only to qualify these gains and losses once they sell a cryptocurrency.
But after a year of heavy-trading, identifying each taxable event is cumbersome. This is in part why services like TokenTax, CoinTracking, ZenLedger, TaxBit, and others have formed.
Still, Blockfolio CEO, Edward Moncada, is confident that users will benefit the most from TokenTax. He said:
“We’ve looked across the market and believe that TokenTax’s product hits on all levels – from user experience to reporting accuracy to actual tax expertise and customer service.”
In the case of an audit, such a service could be a lifesaver.
In a Reddit post on Feb. 9, one user posted an audit request the IRS had sent regarding one user’s crypto activity. The tax agency demanded wire transfers, emails, cryptocurrencies earned from faucets, and even the location of physical crypto ATMs if used.
They conclude the document by adding:
“This is not an all-inclusive list. Requests for additional information may be made if considered necessary.”
Having all of these documents accessible in a single location would quickly alleviate much of this stress, especially for active crypto traders and DeFi power users.
For most Americans, taxes are due by Apr. 15 this year.
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