Crypto traders often make hundreds or even thousands of trades each year. Whether traders exchange fiat for tokens or tokens for tokens, each trade results in a taxable event.

TaxBit recognizes that traders often fail to track the taxes on each trade. As a result, traders may get hit with huge tax bills at the end of the year.

TaxBit tries to prevent this problem by providing traders with real-time tracking of profits. It also creates tax-optimized tax forms for crypto traders filing in the United States. Here’s how the software works.

What Is TaxBit?

Launched in 2018, TaxBit is a Crypto Tax Software designed to take the mystery out of crypto taxes. The company, located in Salt Lake City, UT provides real-time insights into the tax implications of crypto trades. It also generates IRS Form 8949 or IRS Form 1099 for crypto traders.

While TaxBit isn’t the oldest crypto tax filing service, it's one of the best-funded. Its backers include PayPal Ventures, Winklevoss Capital, and other big-name investors.

TaxBit - Is It Really Free?

TaxBit offers a 14-day free trial to all users. The free trial opens up all sections of the software, so users can gain an understanding of how the software is designed to work.

What’s New In 2022?

The College Investor has not reviewed TaxBit before 2022. The company’s most recent round of funding was in March 2021. It appears that the company is using these funds to make the product more robust. For example, the company added additional security, including an independent security certification.

Does TaxBit Make Tax Filing Easy In 2022?

TaxBit is designed to make tax filing easy before and during the tax season. The company generates forms 1099-B and IRS form 8949 for each software user. While TaxBit can't actually file your taxes for you, these forms can be imported into mainstream software programs like TaxAct or TurboTax.

And TaxBit’s efforts at easing tax time don’t stop there. The company provides real-time reports that show a user’s estimated tax burden. This proactive reporting will help users properly withhold taxes

TaxBit Notable Features

While TaxBit is relatively new to the crypto tax game (founded in 2018 rather than 2017 like most of its competitors), it boasts advanced software that competes on nearly every level. Here's a quick look at what it offers.

Hundreds Of Supported Exchanges

TaxBit can be connected to 480+ crypto exchanges, either via API or by importing a CSV file. That's one of the largest list of supported platforms that we've seen from a crypto tax software company. And it's even more impressive that it's been able to reach that level of exchange support in such a short period of time.

Tax-Loss harvesting

Users who opt for the Plus+ or Pro tiers are eligible for tax-optimized reports. The reports, which take advantage of tax-loss harvesting rules to minimize the overall tax burden for active crypto traders.

Real-Time Reporting

TaxBit provides real-time reporting for crypto traders. This reporting shows more than just a portfolio's value. It also shows the taxable gains associated with each trade. With this reporting, traders can avoid huge tax bill surprises the next time they file.

Reviews And Audit Support From CPAs

If any user is audited, that user is entitled to audit support from a TaxBit CPA. Additionally, all Pro users can schedule an annual phone call with a CPA to review their forms before filing.

TaxBit Notable Drawbacks

TaxBit is a robust software that is both competitively priced and easy to use. However, it has a few drawbacks, which we break down below.

Tax-Loss Harvesting Not Available Until Plus+

Tax optimization strategies such as tax-loss harvesting aren’t available on the low-cost Basic tier. Traders need to upgrade to Plus+ to access this cost-saving option.

Plus+ Is More Expensive Than Comparable Levels

TaxBit’s Plus+ level costs $76 more than CryptoTrader’s Day Trader tier. Since both offer similar services (at least at tax time), the Plus+ tier may not be worth the money.

DeFi Is In Beta Mode

Most crypto traders start with Centralized Finance (CeFi) or trading through crypto exchanges. However, “smart” contracts and other forms of Decentralized Finance (DeFi) are becoming more popular. Support for DeFi transactions is still in Beta. This could be a significant drawback if you use a Decentralized Exchange (DeX).

How Much Does It Cost?

TaxBit’s Basic package is something of an “introductory offer” designed for beginners. Users can only generate tax forms for the current year and it only supports up to 250 trades.

The Basic package also only supports CeFi exchanges. By contrast, Plus+ and Pro offer much more robust features including tax optimizations, historic years, and an annual review from a CPA (Pro only).

How Does TaxBit Compare?

TaxBit’s Pro level is one of the best values in the business. It includes all previous years and an annual review from a CPA. People engaged in high-volume crypto trading should absolutely consider this option.

But traders with fewer than 2,500 transactions are likely to find a better value elsewhere. ZenLedger and CoinTracker offer free tax filing to people with fewer than 25 trades. And CryptoTrader.Tax offers a great deal for people with up to 1,500 Trades (Day Trader tier for $99). Here's a closer look at how TaxBit compares.