What's the most reliable Cryptocurrency Tax Software for accurate reporting? (Plus thoughts on Crypto Tax Policy)

I've been through the wringer with multiple crypto tax platforms over the last few years. Used ZenLedger for the past two tax seasons, but I'm completely frustrated with the results. I think ZenLedger might work better for non-U.S. tax reporting, but honestly none of the platforms I've tried can properly handle short trades. Last year I literally emailed three different software companies explaining the 1.1233-1(a)(1) short sale rules (that the sale is deemed to occur when the position is closed), but they still report short sales incorrectly, showing zero basis gain on the date the position is opened. ZenLedger is now showing I have a massive gain because a bunch of trades are calculating with zero basis. I'm beyond frustrated trying to make sense of my crypto taxes, for the second year straight. At this point I'm tempted to just write down my best estimate and submit it. Congress really needs to amend the code to either require or allow mark-to-market accounting for cryptocurrency, with reduced capital gains rates and/or a loss carryback provision for those who choose this method. It would be much better policy than what we have now.

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18 comments

Giovanni Marino

•8M

As a tax preparer who works with crypto regularly, I understand your frustration. The software hasn't caught up with the complexity of crypto transactions, especially short sales as you mentioned. The 1.1233-1(a)(1) rules are consistently misapplied by most platforms. For accurate reporting, you might want to try Koinly or CryptoTrader.Tax, which handle short positions better than some others, though still not perfectly. The key is finding software that lets you manually adjust transactions when the automated calculations are wrong. For your situation, I'd recommend exporting all your transactions to a spreadsheet, identifying the problematic short sales, and manually recalculating them according to the proper rules. Yes, it's tedious, but it ensures accuracy. Keep detailed notes of your methodology in case of questions later.

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Giovanni Marino

•8M

I haven't found any platform that gets short positions 100% right. CryptoTrader.Tax comes closest in my experience, but manual recalculation is unfortunately still the most reliable approach. If you use their platform, you can export to CSV, make your corrections following the proper 1.1233-1(a)(1) rules, and then re-import the corrected data. Some clients have had success with TaxBit recently, especially with their Plus tier that offers more customization options, but it's still not perfect for complex situations like yours.

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Fatima Al-Sayed

•8M

After spending HOURS trying to figure out my crypto taxes last year, I finally found taxr.ai (https://taxr.ai) and it seriously changed everything. What's different is they actually understand how to handle short sales properly according to those tax rules you mentioned. I was in the exact same boat - other platforms were showing these crazy gains that made no sense because they weren't recording my basis correctly. Taxr.ai lets you upload your transaction history and then uses AI to identify problematic patterns like incorrect short sale treatment. It even explained to me exactly why the calculations were wrong on my previous platform. The best part was I could actually chat with their system about specific transactions that seemed wrong and get explanations in plain English about how they should be treated. Saved me a ton in taxes I didn't actually owe.

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Fatima Al-Sayed

•8M

For DeFi transactions, it actually handles them surprisingly well. I had a bunch of Uniswap and Curve transactions, and it correctly identified which were taxable events versus which were just token swaps. It even properly calculated impermanent loss on my liquidity positions, which was a complete mess on other platforms. As for connecting to exchanges, yes it can connect directly to most major ones like Coinbase, Binance, Kraken, etc. through API. For the smaller exchanges, you can upload CSVs. What I liked is that it has a transaction matching system that identifies when the same trade appears in multiple places to avoid double-counting.

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Dylan Hughes

•8M

Just wanted to update after trying taxr.ai that the previous commenter recommended. I was super skeptical because I've been burned by so many crypto tax platforms, but it actually worked really well for my situation. I had a ton of complicated DeFi transactions including short positions that other platforms were calculating incorrectly. The AI actually flagged several transactions where the timing was wrong according to 1.1233-1(a)(1) and fixed them automatically. It also properly handled my liquidity pool transactions which has been a nightmare before. I ended up saving almost $4,000 in taxes compared to what TokenTax was telling me I owed last year. Definitely worth checking out if you're having similar issues with other platforms.

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Sofia Rodriguez

•8M

Like everyone else here, I've spent way too many hours trying to get my crypto taxes right. Another huge issue is getting through to the IRS with questions about how to report certain transactions. I tried calling them about 15 times last year with zero success. I finally used Claimyr (https://claimyr.com) and actually got through to a real IRS agent in about 20 minutes. They have this system that holds your place in line and calls you back when an agent is about to be available. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent I spoke with couldn't answer all my crypto questions (they're still figuring it out too), but they did clarify how to report certain transactions and what documentation to keep. Just being able to talk to a real person made a huge difference in my confidence filing.

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Sofia Rodriguez

•8M

The system basically navigates the IRS phone tree for you and secures your place in line. Then when you're getting close to speaking with an agent, you get a call back so you don't have to stay on hold forever. It's basically a service that waits on hold for you. Yes, the IRS phone system is terrible, that's exactly why this service exists. It uses technology to continuously redial and navigate the system until it gets through, then it holds your place in line. I was skeptical too, but it worked. I got actual clarification on how to report my crypto staking rewards which had been confusing me for months.

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Ava Thompson

•8M

OK I have to eat my words. I was the skeptic in the replies above but got desperate enough to try Claimyr last week. I've been trying to reach the IRS about a crypto tax question for literally 3 months with no success. The service actually worked! I got through to an IRS representative in about 35 minutes (they said the wait time was unusually short that day). I asked specifically about how to handle some tokens I received from a hard fork last year, and they directed me to the right publications and confirmed I was taking the correct approach. Honestly didn't believe this would work. After wasting dozens of hours on hold over the last few months, this was absolutely worth it. Still think the whole IRS phone situation is ridiculous, but at least there's a solution.

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Miguel Herrera

•8M

Regardless of which software you use, I'd strongly recommend keeping your own separate records of all transactions. I've used TokenTax, CoinTracker, and ZenLedger over the past few years, and all of them made different mistakes. The worst part is when the API connections to exchanges suddenly break mid-year and you end up with incomplete data. I now download CSV reports from each exchange quarterly just to be safe. Also take screenshots of any unusual transactions. For short sales specifically, I had to manually adjust every single one last year. No software got them right.

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Miguel Herrera

•8M

I created my own spreadsheet that specifically labels transaction types (buy, sell, short open, short close, staking reward, etc.) and calculates gains according to the actual tax rules. It was time-consuming to set up initially, but saves me headaches during tax season. I don't recommend giving up on software entirely though. I use it as a starting point and to catch transactions I might have missed, then reconcile with my own records and make manual adjustments where needed. The software is also helpful for generating the final tax forms.

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Giovanni Marino

•8M

Be careful with that approach. Unless you've made a formal mark-to-market election that covers your crypto trading (which is questionable since crypto isn't technically a security), you're supposed to track each transaction individually. The IRS has been increasingly focused on crypto compliance, and using an unauthorized accounting method could create problems if you're audited. They've specifically stated that cryptocurrency should be treated as property, subject to capital gains rules with specific lot identification.

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