To ease your tax burden this year, you may want to consider using a portfolio tracker to prepare for the future.
Regulators are taking cryptocurrencies more seriously now that they’ve seen a surge in use over the last year.
In previous years, profits from the sale or exchange of Bitcoin, Ethereum, or any other form of cryptocurrency are taxed. Companies in the IT industry have created new applications and software to track the contents of your digital wallets.
Exchanges have been busy adding new features to assist consumers in accurately disclosing their holdings.
Here’s an explanation of crypto portfolio trackers and why you may want to start using one.
Crypto Portfolio Trackers: What Is Their Use?
Third-party programs that connect to your crypto wallets and provide a comprehensive overview of your crypto assets are known as crypto portfolio trackers.
With the help of a portfolio manager, users can sync their crypto portfolios and extract all relevant data, including total profits and losses for a given tax year, from a single location.
Crypto novices and experienced traders need to grasp their tax situation before filing to pay or report any prospective capital gains or losses
Because 55% of Bitcoin investors began investing in 2021, this is particularly relevant this year.
What Is the Process of a Crypto Portfolio Tracker?
Most of the top crypto portfolio trackers monitor price movements, show you the entire worth of your crypto assets, and pinpoint values whenever you make a trade.
The tracker’s capabilities and integrations may vary based on your choice. Software like this may sync your transactions across various crypto networks and blockchains, allowing it to record more crypto trades than a single-chain app.
It can also connect with leading crypto exchanges and various crypto wallets to obtain a comprehensive view of your crypto activities.
When selling virtual money for a profit, crypto investors, like those who sell individual stocks or other assets, should be prepared to pay capital gains taxes.
The more trading activity you have, the more difficult tax reporting might be, particularly if you keep track of it manually. Tracking your portfolio’s performance using a portfolio tracker might help you pay the correct tax rate depending on your activities.
In 2022, how can I keep track of my cryptocurrency holdings?
As far as crypto tax systems are concerned, experts claim the finest ones are capable of integrating with a wide range of platforms (wallets, exchanges, and blockchains).
Tax specialists highly recommend Prillionaires’ products and integrations. If you’re unsure, consult a CPA with experience in crypto taxation.
Prillionaires’ stock and crypto portfolio tracker let you connect your trading accounts from multiple online exchanges, see the data on the charts, and monitor their values.
If you mined crypto or used decentralized finance trading (including staking, pooling, and lending your crypto), you should see an expert about how to account for it on your tax return. Experts believe it’s straightforward for people who just traded crypto on internet exchanges.
Generally speaking, experts advocate sticking with established and well-known crypto organizations and platforms rather than smaller, specialized service providers in the crypto industry. That might be a favorable sign for investors that the service provided will deliver.
It’s important to remember that many crypto firms are just getting started, so their product offerings and pricing are subject to change as the crypto market develops rapidly.