What is TaxBit? How Does Crypto Tax Automation Work?

taxbit

TaxBit is a cryptocurrency tax software company that helps cryptocurrency holders and investors calculate their profits, losses, and tax liabilities, and generate IRS-friendly tax forms.

Once a user connects their exchanges via TaxBits read-only API keys, TaxBit automatically pulls the users transaction history and cycles them through their tax engine. Users are then able to see the real-time tax impact of all their cryptocurrency transactions and download their yearly tax reporting forms.

Since TaxBit only collects read-only API keys, the platform only has access to view a users transactions and zero access to the actual assets. In the hypothetical event of a hack, the hacker would only have access to see a users transactions, with no access to the assets. A TaxBit representative also stated that the platform does not store personal information such as social security numbers or tax identification numbers on their servers.

TaxBit Founders and Company Information

TaxBit was founded by two brothers and is headquartered in Salt Lake City, Utah.

taxbit team

Austin Woodward (CEO) is a certified public accountant (CPA) with a masters degree in accounting from BYU, a top ranking accounting program in the US. Prior to TaxBit, Austin was the controller and finance professional at Qualtrics.

Justin Woodward (Tax Compliance and Legal Officer) is a licensed tax attorney with a law degree from the University of Chicago, a top law program in the US.

TaxBit Pricing

TaxBits pricing is separated into three tiers based on transaction volume. Every package includes API exchange integrations, real-time portfolio and tax tracking, transaction by transaction CPA and IRS audit trails, online customer support with certified tax experts, and automatic tax form generation.

TaxBit Pricing

TaxBits business model seems to leverage their in-house automated systems and processes to provide an affordable tax preparation price tag (relative to hiring a CPA) to attract cryptocurrency-savvy customers. Since most users generated losses in 2018, many of them are eligible to report those losses and increase their 2018 tax refund.

Onboarding Flow

Getting started on TaxBit is a fairly straightforward process. First, TaxBit asks some basic demographic questions that allow them to calculate a users individual tax rates. TaxBit displays a users taxable gains and losses and then applies their individual tax rates to those gains and losses to display what they owe in taxes.

After calculating a users tax rates, TaxBit guides users to link their exchanges. Some exchanges, such as Coinbase and Uphold that have quick single sign-on integrations allow users to click connect to easily link their exchange. Other exchanges, such as Binance and Bittrex, provide API keys allowing users to paste the values into TaxBit to connect the exchange to their account. TaxBit provides documentation and video tutorials specific to each exchange guiding users on how ...

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Tags: Tax, User interface, University of Chicago, Austin Woodward, Salt Lake City, Internal Revenue Service, Certified Public Accountant