TokenTax Review 2023: Powerful And Pricey Crypto Tax Software

TokenTax is a crypto-first tax filing company. The company specializes in crypto tax optimization and has a stand-alone product that calculates the taxes due on crypto transactions.

In addition to the stand-alone product, the company offers full-service filing, including back-tax filing for crypto traders who have inaccurate data going back to 2014.

What Is TokenTax?

TokenTax is a tax-filing company that offers tax-filing services in 18 countries, including the United States. Founded in 2017, the company provides both full-service filing and a standalone application that calculates taxes for crypto transactions.

As a tax-first company, TokenTax specializes in tax minimization strategies, including tax-loss harvesting. It also utilizes IRS-compliant logic related to margin trading and other aspects of crypto trading.

Users who opt to use TokenTax can generate Form 8949 for cryptocurrency. Or they can have TokenTax file their complete return for them.

In 2022, we named TokenTax Best Full Service crypto tax software on our annual list of the best crypto and NFT tax software, and it remains a top choice in 2023.

Some Crypto Tax Basics

It's important to understand how the IRS treats crypto and taxes.

Basically, crypto tokens and NFT are treated like securities or stocks. When you buy or earn a token, that token has a cost basis which is the value of the token (in $USD) at the time of purchase. Just like stocks, people have capital gains and losses when they sell or trade the tokens.

The profit or loss depends on the value of the token at the time you sell it.

 Crypto tokens are also eligible for tax-loss harvesting. That means you can use realized capital losses (from selling tokens that have depreciated) to offset some or all of your realized capital gains.

For most traders, their crypto transactions will be taxed as investments in the ways described above. However, note that there are also times when cryptocurrency can be taxed as ordinary income. Examples include if you received crypto for mining or staking or as interest on a loan.

TokenTax - Is It Free?

TokenTax does not offer any free version. Users must pay for a specific tax year before they can start using the service.

The lowest cost plan will set you back $65 per tax year. Higher-end plans cost $199 to $3,499 per year.

What’s New In 2023?

It’s been a slow year in the cryptocurrency markets and not surprisingly, TokenTax hasn’t made many big changes or updates to its software.

Does TokenTax Make Tax Filing Easy In 2023?

TokenTax software will ease tax filing for crypto traders. The software automatically calculates capital gains and losses and recommends tax-loss harvesting options. This allows traders to benefit from tax minimization strategies without all the effort.

DIY tax filers who use TurboTax will be happy to learn that TokenTax integrates directly with the tax filing software. And unlike nearly all of its competitors, TokenTax also has a CPA and a whole tax filing team available for hire.

TokenTax's tax experts can file your taxes on your behalf and provide white glove service if you need help piecing past gains and losses together based on defunct exchanges. While expensive, this is a service that most accountants simply don’t offer.

You’ll pay a pretty penny for the highest level of service, but that’s worthwhile for some wealthy traders with complex portfolios or trading strategies.

TokenTax Features

TokenTax will file your whole return or create reports for you to file on your own. These are some of the essential features.

Imports From Every Exchange

TokenTax says it's the "only cryptocurrency tax calculator that connects to every crypto exchange." Dozens of exchanges, including the ones shown below can be connected directly via API.

However, even if an API integration isn't available, TokenTax can still import your trade data. All you have to do is upload a CSV file from your exchange. If TokenTax's software can't automatically process the report, its human staff members will personally take care of adding the trades to your account.

Tax-Loss Harvesting

TokenTax works to minimize users’ tax burden by creating opportunities for tax-loss harvesting (where legal). This focus allows traders to take advantage of some times when trading didn’t work out.

Supports Margin Trading

TokenTax supports margin trading and offers API integrations to most exchanges that support margin trading. Users unlock some margin trading support at the Premium level but may need to upgrade to Pro, depending on the exchanges they use.

TokenTax Drawbacks

TokenTax offers an excellent user experience, and it offers solutions for crypto traders using sophisticated techniques (like margin trading). However, the software isn’t perfect. These are a few drawbacks.

No Free Trial

TokenTax doesn’t offer a free trial. To start using the software, you need to pay. With super-high prices, this can be a waste of money if the software doesn’t do what a user needs it to do.

API Integration Locked At Certain Levels

TokenTax does not universally unlock API integrations. The most common exchanges are unlocked at the Premium level, but others are not unlocked until the VIP tier.

Steep Increases In Price

TokenTax has a competitive $65 pricing tier (though it only supports Coinbase), but prices increase steeply after that. Users who want to access all margin exchanges via API will have to pay for the Premium tier, which is $199 per tax year.

Depending on how many transactions you've done, you could quickly find yourself in the $199 tier. 

For more complicated taxes, they also have their highest tier offering, which starts at $3,499 per year.

TokenTax Online Pricing Plans

TokenTax charges fees based on several factors. Each tier unlocks more trades, more API connections to exchanges, and different tax minimization strategies. The VIP level includes consultations with crypto tax experts who can help figure out tricky issues related to defunct exchanges.

How Does TokenTax Compare?

TokenTax is one of the only crypto tax prep companies that can offer full service if needed. That said, the VIP pricing tier (which includes hands-on support) is very expensive. Tax filing itself requires a custom quote. Because of the high prices, almost all tax filers will opt for TokenTax’s less expensive options.

Overall, TokenTax’s Basic tier is a poor value relative to the competition. In this tier, Coinbase users who have fewer than 500 trades can use TokenTax’s Basic package. However, users can just as easily pay TurboTax one time and connect to Coinbase.

At higher levels, other companies support more trades for lower costs. TokenTax offers specific support for margin trading, but other companies, including CoinLedger also supports margin trades. 

From a value perspective, TokenTax largely doesn’t make sense.

Is It Safe And Secure?

TokenTax uses encryption and read-only access to keep information safe and secure. Users should not worry that TokenTax will steal their tokens or their personal information. The company also protects user information with multiple forms of security.

When users connect to APIs, they will be prompted for multiple forms of authentication. However, TokenTax itself does not require multi-factor authentication for user accounts. A simple email and password combination is used initially. This oversight could be the company’s largest security risk.

How Do I Contact TokenTax?

Unless you're a VIP plan subscriber, your best option to receive support from TokenTax is probably to use its Live Chat service. However, you can also try reaching out by phone at 845-663-1173 or email at support@tokentax.co.

If you do choose the VIP plan, you'll get access to an entirely different level of support. You'll get two 30-minute sessions with a tax expert and will have access to personalized accountant support to help you solve even the most complex tax issues.

Is It Worth It?

Overall, TokenTax offers a great product, but it's not competitively priced. Although TokenTax heavily advertises that it supports margin trading, it's not the only company that supports this. In 2023, most crypto traders should pass on TokenTax. Traders can find similar crypto tax filing software at lower price points.

TokenTax FAQs

Let's answer a few of the most common questions that people ask about TokenTax:

Can TokenTax help me file my crypto investments?

Yes, TokenTax can help tax filers complete their taxes. The company can file your entire return on your behalf.

Can TokenTax steal my crypto?

No, TokenTax uses read-only APIs to get information from your wallet or the exchanges you use. It cannot steal your information.

Do I need to report my crypto wallet transfer data to the IRS?

It depends. While moving cryptocurrencies between wallets is not a taxable event, certain events that tax place inside your wallet could be taxable, such as earning interest, receiving staking rewards, or receiving crypto as payment for services rendered.

Can international traders use TokenTax?

Yes, TokenTax says that its reports can work for any country and can provide results in whatever currency you choose.

TokenTax Features