TokenTax

Crypto taxes made easy. TurboTax for cryptocurrency.

#5 Product of the DayFebruary 20, 2018

TokenTax is the easiest way for crypto investors to file crypto taxes & minimize their 2017 tax liability. Users signup, upload their data, & our tax minimization algo does the rest. We test all acct methods and show you FIFO and minimized. Then our acct team will ensure the accuracy of your crypto tax data. All major exchanges & wallets supported!

Around the web

Reviews

  • Nickfading entropy
    Pros: 

    Zac

    Cons: 

    More API integrations needed

    The FIFO or LIFO algo used by others crushes you on capital gains. Tokentax is saving me a pile. Zac is helping me wade through all the instances where cost basis is not established or naming mismatches between exchanges occur. Must use this product.

    Nick has used this product for one month.
  • Pros: 

    Better calculations for my tax liabilities that have saved me money

    Cons: 

    They are making the product better and better every week

    Easy to use and a real support person helped answer all of my complicated tax questions

    Alina Lee Lane has used this product for one month.

Discussion

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Alex MilesMaker@milesalex · Pomoji, Studiomile, Dropbox, Readmill
Hey Product Hunt! Today I'm super excited to release the official version of TokenTax: The Grand Prize Winner in the Product Hunt hackathon! To reward the early participants we've launched a new customer referral system -- where you will get $10 for every new user you refer-- with no limit! We'll send you a check or direct deposit at the end of each month with your rewards. Some other new things you can look forward to with TokenTax: Chat with our tax advisors: --- We have crypto tax experts on staff that will ensure your cryptocurrency data is accurate and all of your tax questions are answered - no matter how tricky! Maximize your savings --- We've shifted our focus to be about tax optimization. That means different things for different users - but for most of you we will determine the optimal tax lot that should be sold to minimize your tax burden, for every trade, across all of your exchanges and wallets. Some users might want to pay more taxes this year because you're carrying forward tax losses, or you re in a particularly low tax bracket this year. If this is you - reach out to us and we will ensure you get exactly the tax result you're looking for. Very soon we will be incorporating a new customized tax feature where we will intake a few data points (filing status, estimated income, self-employed or not, and address and give you an even more precise tax minimization product)! All the exchanges --- Use our CSV uploader to import on the unlimited plan to upload your transactions from any exchange For a more elaborate story behind the making of TokenTax, checkout my post on Medium: https://medium.com/@milesalex/la...
James Walsh@mr_j_walsh · Get press coverage - prumio.com
@milesalex Congrats on the latest launch - love the product and will be using myself in the near future.
Sven van der Zee@svenvdz · Founder AcceptCrypto
Huge improvement from the previous version, keep it up guys!
Tom Bielecki@tombielecki · Cofounder, PrintToPeer
U.S. only?
Zac McClureMaker@zac_mcclure · TokenTax
@tombielecki We're planning to expand internationally after the US tax season ends!
Orhan Bayram@orhanbayram · Growth, Countly Analytics
Just great :) Do you have plans to add other countries?
Zac McClureMaker@zac_mcclure · TokenTax
@orhanbayram Yep- we already have a few customers from Canada, South Africa, etc
Ryan HooverPro@rrhoover · Founder, Product Hunt
Awesome to see this launch from the Product Hunt Hackathon, late last year, @milesalex. What have you done to ensure this is legally compliant/reliable?
Zac McClureMaker@zac_mcclure · TokenTax
@milesalex @rrhoover hi Ryan! Thank you for the next question- we have taken a number of steps to ensure our legal compliance 1) We have interviewed and consulted with many of the leading crypto accountants in the space 2) We have been transparent about what accounting methods we use and are using a method specifically allowed by the IRS for our tax minimization algorithm (specific - shares accounting treatment), along with FIFO and LIFO 3) Our company ethos and mission is about promoting the long term sustainability of crypto investing and the blockchain / crypto ecosystem. For this reason we built a tool that makes it as easy as possible for people to calculate and then file all of their cryptocurrency related tax events. We want people to be able to be good actors in the cryptocurrency space- and now we are giving them the tools and knowledge to make that happen! 4) We are embracing the IRS principal of being conservative with our methods for deferring taxes- for example informing clients privately and publicly in our social media that we believe using a “1031 like-kind exchange” as a way to defer all cryptocurrency taxes forever is unlikely to be a successful strategy in the long run. We want to operate safely within the parameters set by the IRS which has been difficult given the dearth of information from them. But we look forward to hopefully working with them to iterate our system and the tax reporting rules as they continue to issue guidance and we continue to write about the space and work to become the industry thought leader in the crypto tax space.
Zac McClureMaker@zac_mcclure · TokenTax
@milesalex @rrhoover Ryan, we’re so sure of our product’s compliance that we offer unlimited audit assistance and support included Free within our VIP package, in case the IRS requests more info from one of our users or even wants to to a complete audit of our user. Everything we are doing as far as Tax minimization is perfectly allowable for stocks or any other type of capital asset according to the IRS. The methods are just less well known in this space because they only become extremely important in the case of asset prices rising very quick in a very short amount of time as what happens in crypto last year. Stocks are almost always reported to the IRS using FIFO - first in first out, mainly for simplicity purposes and because accountants are usually paid to complete a return not on a commission basis or somethings to minimize taxes. For many filers using a different accounting method for sales Sid stock would also lower taxes, but not enough to really make people notice when stocks are only going up 10% per year on average. But for cryptocurrency the massive price gains in such a short amount of time means that just be using one IRS endorsed method over another can defer over 90% of a user’s taxes as compared to FIFO. The gain won’t be avoided forever - when the user eventually sells the asset they will pay gains, but hopefully by then they will have held over 1 year to get the much lower long term capital gain tax rate. Additionally, tax rates are dropping in 2018 as compared to 2017- another benefit of deferring. In fact, we have some clients who, for example made over $1m In short term capital gains using FIFO, and yet have a net worth equal to only $1.1m or so. This means if the price of crypto dropped precipitously at the start of 2018- as it has- they could end up owing the IRS more in 2017 taxes than they’re crypto is actually worth on Tax Day - April 15th. It is because of these types of situations that we launched our product to help people navigate the (at times) shockingly complex world of tax regulation on investment gains
Michael Dempsey@mhdempsey · Partner at Compound
@milesalex @rrhoover @zac_mcclure To make sure I'm understanding correctly. Are you not using FIFO for crypto taxes? If so, can you point to precedent for why a non-tangible asset wouldn't use that?
Zac McClureMaker@zac_mcclure · TokenTax
@milesalex @rrhoover @mhdempsey FIFO is one option - but we HIGHLY recommend against it if you want to reduce your 2017 tax bill. Simplifying the process of using accounting methods other than FIFO is a big reason why we created TokenTax - because most accountants were just using FIFO for their clients and paying thousands of dollars in taxes that they could've deferred! Accountant's like it because it is simple and most accountants are getting paid a flat fee to do a return-- so they want to get it done as quickly as possible. If they lower your taxes by $2k they don't get a bonus, so why would they create more work for themselves? This moral hazard with many accountants is another big reason why TokenTax is such a valuable tool for anyone who is investing in crypto. For most of our clients we pay for ourselves many times over. Lastly, regarding FIFO, it's a huge risk to front load your taxable gains and pay taxes on gains in 2017 - especially with an asset like cryptocurrency. Why? Here's an example- Client A starts with $10k - he turns it into $1m. Using FIFO his taxable gain is $600k, using our method his gain is $300k. If he pays tax on the full $600k - he will basically be writing a check to the federal, state, and local tax authorities for over $300k, and his new stock basis will be $610k. Then- if his crypto holdings drop below that amount, say, to $200k, he can't go back and reclaim the taxes he already paid, he can only claim his losses going forward. So he would have $400k in losses to carry forward. The IRS lets you carry forward only $3k per year, so it will take him 133 years to use up this loss! With our system he never would've had to pay the IRS that much because he never would've realized the gains. Client A would've paid less in 2017 and he wouldn't have had a taxable loss to carry forward for 133 years. When looking at the FIFO method for crypto investments I have actually seen several customers who owed the IRS more for 2017 gains than their crypto was actually worse as of the start of February 2018 because crypto prices had dropped so much. You won't find a tax prep company that understands the ins and outs of the crypto investment tax situation better than TokenTax - especially at our price point.
Michael Dempsey@mhdempsey · Partner at Compound
@milesalex @rrhoover @zac_mcclure Why do you think that you have to report unrealized capital gains for crypto?