Knowing Crypto Tax Software: Definition, How To Work, And Examples

Crypto tax application. (photo: doc. Bitcoinist)

JAKARTA The presence of crypto tax software is very important for traders and investors of digital assets. Crypto taxes have been applied in various countries including Indonesia. The crypto tax application itself already exists and can be used by crypto asset holders including Cryptotaxcalculators, Coinly, CoinTracker and so on.

On May 1, 2022, the Indonesian government has set a crypto tax. Each domestic cryptocurrency trade is subject to Value Added Tax (PPN) of 0.11 percent and Income Tax (PPh) of 0.1 percent. This provision is stipulated in PMK No. 68/PMK.03/2022, based on the website of the Director General of Taxes, Taxes.go.id.

Therefore, the existence of crypto tax software is urgently needed to calculate how much tax must be paid from every profit a crypto asset. To calculate these tax pieces, you can use a number of software specially designed to calculate crypto taxes. So you can estimate the tax deductions to be imposed if you benefit from crypto assets.

However, before going any further, it's a good idea to get to know what crypto tax software is. Not only its understanding or definition, this article will also explain how the crypto tax software works.

Crypto Tax Software Definition

Crypto tax software is the software used to prepare or calculate crypto taxes. This can be in the form of certain applications. Crypto paja software simplifies the tax application process and allows you to complete your tax filing in a matter of minutes.

Every digital asset trade will be taxed by the government, which is why top exchanges such as Coinbase report to US government tax agency Internal Revenue Service (IRS), regarding its user activities for proper tax monitoring. It is under the auspices of the United States Department of Finance. If in Indonesia, we have the Directorate General of Taxes.

There's a lot of crypto tax software out there. While some are free to use, others are paid, but with free packages with limited features. Since the software has been programmed, anyone can use it to apply for their taxes, even without any technical or programming knowledge.

In addition to calculating taxes, crypto tax software also helps track your crypto portfolio. You can use it to set up your transactions and track your transaction history. All of this helps sort your transactions into profits and losses, which can be automatically translated into tax applications.

How Crypto Tax Software Work

With the crypto software, users have the convenience of automatically calculating the tax range imposed on them. In addition, users can also manage their portfolio. This depends on the crypto tax software used.

Once you decide which software to use, users need to connect it to your crypto exchange or wallet account. Once this is done, the software automatically manages your transactions, including selling, buying, trading, and even accepting cryptocurrencies as payment.

Then separate it into profit and loss, which determines what tax you have to pay and what doesn't, depending on local legal requirements in their respective countries. This information can be filled automatically to apply for your tax, or you can choose to apply for it manually.

The software also generatessa forms for various types of taxes, which you can fill in with the information provided to apply for your taxes. Some crypto tax software, such as Cointracker, also provides information about the crypto market in general, with the price of cryptocurrencies directly for you to monitor the market.

Examples of Crypto Tax Apps

Currently, there are various crypto tax software that can be built. These software provide convenience to users in taking into account the tax range imposed. Here are examples of a lot of software built:

Important Using the Crypto Tax App

As is known, cryptocurrencies appear using new technologies, namely blockchain. Because cryptocurrencies are still new, governments from various countries are trying to regulate their trade and impose taxes on these industries. However, the cryptoverse does not yet have clear rules that are globally agreed upon.

Launching MakeUseOf, this makes the handling of tax applications related to crypto challenging. Therefore, you need crypto tax software to automate the calculation process.

Using crypto tax applications saves you a lot of time and energy to go through compared to if you apply for a tax manually. First, crypto tax applications calculate your taxes in a matter of minutes.

Tax calculations are also usually very accurate, which reduces the chances of you getting into trouble with law enforcement because of the wrong taxes. Since it is also a crypto tracking tool, it helps you smoothly track your portfolio to make the right investment decisions.

Even more than this, most of them are equipped with a crypto tax levy that ensures you don't pay taxes more than you should. This helps you save money too.

Crypto tax software is usually programmed with regulatory requirements in every country supported by the software. For example, if crypto tax software supports users from the US, it will be programmed to apply for taxes under a calculated US law.

Users of this crypto tax software consist of crypto traders and investors, both individuals and corporate. Crypto software is also intended to provide convenience in managing portfolios and tax filings easily and accurately.

Expenditures of Using Crypto Tax Apps

The advantages you can get when using crypto tax applications vary, including being used as your tax payment archive. Here are the advantages of using crypto tax software:

By using crypto tax software, you can archive how much tax to pay from each profit you get within a certain period of time. For example, within a year you get a profit of a certain percentage in a few months. This provides easy filings within a certain period of time, instead of you having to sort things out and calculate them one by one.

Users of crypto tax applications can perform tax applications quickly. Apps can be processed in a matter of minutes. This is different when a user submits it manually to a tax office that takes tens of minutes and even hours because it has to queue.

You use crypto tax applications anytime and anywhere. You also don't have to go and queue at the tax office. Because this will take time and reduce your mobility.

Thus, the understanding or definition of crypto tax software is the following understanding, how it works, and the types. We have also presented examples of crypto tax applications that can be used. Even so, each application has its own advantages and disadvantages. Therefore, determine the crypto tax application that suits you as described by VOI.id.