Launched in 2014, Bitcoin.tax (previous BitcoinTaxes), was the first cryptocurrency income and tax calculation service that became popular by meeting the needs of the growing crypto population that wanted to make sure they were filing correct and appropriate tax returns. They also provide services to tax professionals and tax firms, who add crypto taxes as an offering to their clients using their software. We recently had a conversation with Bitcoin.tax’s CEO Colin Mackie to find out why integration with crypto tax API is essential to run crypto tax calculation.
How to use crypto tax API to run crypto tax calculations?
Crypto taxes have become an increasingly important topic for investors and traders as cryptocurrencies have become more popular in recent years. With the rise of Bitcoin, Ethereum, and other digital currencies, understanding crypto taxes is essential for any investor or trader in the cryptocurrency space. Crypto taxes can be complicated, but with the right software, they can be managed. In recent years, the emergence of cryptocurrency has sparked an interesting debate among both investors and governments around the world – how should crypto taxes be handled? As more people invest in digital currency, the question frequently appearing is how to properly calculate taxes has become increasingly important.
Calculating taxes related to cryptocurrencies can be a complex process, as different countries have different regulations. This is why there is a great need for cryptocurrency tax experts.
“Customers that trade digital currencies must pay taxes, and in order to do it effectively, they require software that can accurately calculate capital gains and deficits. Crypto tax software simplifies the process by synchronizing various cryptocurrency exchanges and wallets easily and furnishing tax reports quickly. Undoubtedly, Bitcoin.tax is the most beneficial tax program for digital currencies. The system oversees crypto portfolios, generates precise tax reports, and is compatible with various wallets and exchanges. In addition, Bitcoin.tax suitable for both experienced and inexperienced traders.” said Bitcoin.tax CEO Colin Mackie
In order to calculate taxes, Bitcoin.tax needs accurate spot (and historic) pricing across tradeable cryptocurrency markets for individual exchanges. There is a need for accurate and extensive pricing information to produce the correct values required for filing taxes. CoinAPI provides historic price data collected from the most commonly used exchanges, as well as providing a real-time feed of trades as they happen on those exchanges. After connecting, the API returns the user’s transaction data, enabling Bitcoin.tax to detect taxable transactions and determine gains, losses, and income to produce a number of crypto tax reports to assist investors in filing with their country’s tax offices swiftly and efficiently.
“Our collaboration with CoinAPI is aimed at providing the most reliable historical and real-time cryptocurrency data for tax calculation. Because each jurisdiction has its own set of regulations, filing taxes may be laborious, especially when figuring profits from cryptocurrency trading. The Bitcoin.tax allows traders to easily generate their crypto tax statements. This collaboration comes at a perfect time when our user base is growing and having more requirements for their new trading platforms,” said CEO and founder Bitcoin.tax Colin Mackie
Here are the challenges Bitcoin.tax faced
1. No single source of historical and real-time cryptocurrency price data
There is no single solution to obtaining historical and real-time cryptocurrency price data. Instead, developers and traders must rely on a combination of different Crypto APIs and Market Data APIs to be able to access the most up-to-date information. Bitcoin.tax was looking for an API that provides access to a variety of data sources, including cryptocurrency exchanges, and more.
2. Lack of real-time streamlined data
The lack of real-time streamlined data is a major issue for businesses across industries. The need for accurate market data is increasing day by day as businesses move from traditional data solutions to faster and more efficient solutions. To address this problem, there are services such as Crypto API and Market Data API which provide a wide range of data in real-time to help businesses make better decisions.
3. The manual process of getting data from multiple sources
The manual process of getting data from multiple sources can be tedious and time-consuming. It requires a great deal of effort and expertise to collect data from different sources. For instance, to get market data, one has to manually search through various websites and market data vendors to find the right data. Similarly, to get tax crypto data, one has to search through various crypto exchanges to find the right data
Bitcoin.tax decided to select CoinAPI to be its source of cryptocurrency data since it has been a dependable source of tax information for past years. With CoinAPI’s API, Bitcoin.tax can perform tax calculations for all significant cryptocurrencies. The API for market data enables tax and accounting software to interact with each other, thereby leading to increased efficiency, automated tasks, and better staff retention. It is not unusual for some tax and accounting companies to use up to 40 applications, which would require an immense amount of effort to manage.
Bitcoin.tax decided to rely on CoinAPI due to its dependability when it comes to providing cryptocurrency data through an API for accurate tax calculations.
“The ability to have the wide range of crypto data is a game-changer,” Colin Mackie told us. “The API is quite simple to use and makes it simple to obtain the data you require”
Bitcoin.tax is now able to supply tax computations for its customers that are tailored to their individual investments. CoinAPI is the most dependable and cost-efficient selection for Bitcoin.tax and has been utilized by the firm for an extended period, offering precise data for their investigations into digital currency trading approaches.
Here’s why Bitcoin.tax uses CoinAPI’s API to run crypto tax calculations
1. Get access to historical and real-time streamlined data
CoinAPI provides historic price data collected from the most commonly used exchanges, as well as providing a real-time feed of trades as they happen on those exchanges.
2. Getting spot time data
CoinAPI can be used to provide spot pricing information for a number of different exchanges. The API allows developers to quickly access and integrate market data into their applications. This helps ensure that crypto tax companies have access to the most up-to-date pricing information, which is essential for making proper tax calculations.
3. Saving time in getting data
By allowing tax and accounting applications to communicate with one another, market data API increases efficiency, automates tasks, and improves staff retention. As many as 40 programs are used by some tax and accounting organizations. Take into account the effort required to manage that many applications. By using APIs and integrations that make sure the programs function together, your team may avoid errors and save time on tedious data input jobs. The consumer experience is enhanced and costs are reduced, but these are not the only benefits.
4. lightning-fast requests to Bitcoin.tax
Simplified set-up and configuration for business users. Our next-generation Market data API is designed for high availability, high performance, and high throughput. Our blazingly fast content service instantly returns content in bandwidth-optimized formats. Behind our APIs is a large, distributed infrastructure, scaled to handle millions of requests with many layers of optimization and failovers.
5. Making integration quick and simple
Using an API integration platform, teams can connect disparate technologies quickly and easily, or expose existing integrations as APIs or microservices to bring new apps to market. APIs can help you automate parts of your business that you didn’t think were possible, create seamless integrations between your cloud services, and create automated reports and dashboards. APIs, thankfully, enable you to create integrations between multiple services in order to close loops.
6. Providing multiple price sources
You can expect to retrieve real-time and historical market data across asset classes including stocks, futures, options, commodities, and currencies. With a Market Data API, you can get the data you need quickly and easily without the hassle of manual data entry or dealing with multiple sources. This is a great solution for tax and accounting software that needs integrated financial data from multiple sources in one place. With a Market Data API, you can access the latest market news, price quotes, and other financial data from leading exchanges and vendors.
7. The most accurate crypto pricing thanks to access to crypto tax API to run crypto tax calculation
It is critical for tax/accounting organizations to ensure data quality in order to make proper tax calculations and avoid critical mistakes. To calculate and estimate the appropriate tax price based on the acquired data, crypto market data must be accurate, consistent, complete, relevant, and dependable.
8. Data standardization and mapping
Tax companies need cryptocurrency names and mappings, because there may be one cryptocurrency that has several names – that’s why the normalization of data is so important. By standardizing data collecting using CoinAPI, you are one step closer to having a complete and accurate crypto data picture that you can actually use. CoinAPI has its own database, which we also use to calculate exchange rates.
How to use crypto tax API to run crypto tax calculations?
In this article, we answer the most frequently asked questions about API tools for crypto tax and accounting software and provide you with the ultimate Crypto API Tool Guide For Tax And Accounting Software. To integrate your existing financial applications with CoinAPI’s API ecosystem, try our API for free with CoinAPI and see if the product fits your needs.