Crypto accounting firm TaxBit has launched a network allowing users to connect accounts across the crypto ecosystem to generate their transaction history when filing their taxes.
US taxpayers who trade crypto generate Form 8949 to show transaction history for the year when filing with the Internal Revenue Service (IRS). The form illustrates transactions involving capital assets held in the short-term, meaning a year or less. It requires taxpayers disclose a description of the property, the date acquire, the date sold or disposed of, the proceeds and cost basis for every short-term transaction. This allows the taxpayer to generate their gain or loss on each trade.
For those trading crypto on multiple platforms, this can be an onerous process. Some traders can rack up thousands of transactions each year, and for many, the only recourse is to hire an accountant or buy software to parse through the transactions on each platform. TaxBit is looking to expedite this process.
Its TaxBit Network allows users to integrate their data from over 500+ participating sources. Those participating firms include large centralized venues like PayPal, Coinbase, Gemini, Binance.US and FTX.US, as well as decentralized finance (DeFi) and non-fungible token platforms like Uniswap, SuperRare and Nifty Gateway.
Users connect their accounts to their TaxBit account, which through the network they can create for free, and the firm populates a free Form 8949 for each venue the taxpayer has connected. There is no transaction or wallet address limit. Some firms will even include buttons to sign up for a TaxBit account within their own applications.
Indeed, 2022 is shaping up to be a challenging tax season for the IRS, even without the added challenge of the new and still-debated infrastructure bill tax provision for crypto. The Treasury has already warned that refunds could be delayed and the agency is preparing for considerable backlogs.