If you’re a frequent cryptocurrency investor, accurately filing your taxes can be tricky. For starters, you have to report capital gains from crypto trades. And things like mining income, gas fees, and staking rewards only complicate matters. Thankfully, tax software like ZenLedger specializes in cryptocurrencies and NFTs. If you need assistance with tracking your crypto gains, its paid plans could certainly help. ZenLedger even integrates with TurboTax to help you properly file your taxes. But ZenLedger plans can get expensive. And some features are more useful than others depending on how often you trade. That’s why our ZenLedger review is covering the main features, pricing, and how to decide if this crypto tax software is the right choice for you.
What Is ZenLedger?
ZenLedger is one of the most popular cryptocurrency tax software options out there today. The company began in 2017 and operates out of Washington state. According to its website, ZenLedger aims to “simplify DeFi, NFT, and crypto taxes for investors and tax professionals.” In 2014, the IRS began treating virtual currencies like property. This means anyone who deals with cryptocurrency has to consider tax implications. This is especially true if you make frequent trades or earn additional income from sources like cryptocurrency mining.
In 2022 we named ZenLedger the Best Value Crypto Tax Software in our annual ranking of the Best Crypto and NFT Tax Software Programs.
What Does It Offer?
Like traditional tax software, the advantage of using ZenLedger is that it consolidates all of your cryptocurrency transactions and performance so you have an accurate picture when filing your taxes. If you have capital gains from cryptocurrency trading or want to offset your taxes through tax-loss harvesting, software like ZenLedger is incredibly useful thanks to its variety of tax features.
Crypto Portfolio Tracker
ZenLedger integrates with over 400 cryptocurrency exchanges, 40 blockchains, and 30+ DeFi protocols. This means you can import your transaction history and holdings from various exchanges, wallets, and crypto projects into your ZenLedger dashboard. Some of ZenLedger’s most notable integrations include:
- Cash App
- Trezor wallet
Once you import your crypto transactions and holdings, your dashboard breaks down portfolio performance and value-per-holding. If you pay for ZenLedger, you can dive a bit deeper into market and portfolio performance across different timeframes.
Overall, this provides a quick snapshot of how your cryptocurrency investments are doing. However, ZenLedger isn’t a dedicated crypto portfolio tracker by any means. If you’re looking for a comprehensive portfolio tracker for stocks and crypto, software like Kubera is definitely superior.
Related: Best Portfolio Analysis Tools Of 2022
Downloadable Tax Reports
The main reason you should consider ZenLedger is its downloadable tax reports. Since ZenLedger can import all of your transaction data, it’s able to quickly calculate additional income as well as capital gains and losses. The main tax forms ZenLedger offers include:
- IRS Schedule 1: ZenLedger calculates additional crypto income from sources other than wages, dividends, and interest.
- IRS Schedule D: With ZenLedger’s crypto tax calculator, you can calculate your capital gains and losses from crypto for the year.
- IRS Form 8949 (Sales & Other Dispositions): This form lets you report the actual date you acquired and sold different virtual currencies. ZenLedger calculates proceeds from sales and if you incurred gains or losses.
ZenLedger also supports three cost basis methods: First In First Out (FIFO), Last In First Out (LIFO), and Highest In First Out (HIFO). Your tax center tab tracks taxable crypto income from a variety of sources, including:
- Interest from crypto savings accounts
- Miscellaneous rewards
Overall, ZenLedger lets you save time and improve accuracy when filing your crypto taxes. If you’re a beginner investor or don’t trade regularly, software like ZenLedger likely suffices. However, investors with large portfolios and a variety of cryptocurrency and DeFi activity should still consider consulting a tax professional.
Another useful ZenLedger feature is its tax-loss harvesting tool. Tax-loss harvesting involves selling assets at a loss to offset capital gains to lower how much you pay in taxes. The idea is to replace the assets you sold at a loss with similar assets so your portfolio composition remains the same. As an example, let’s say you bought $10,000 of Bitcoin as it was peaking at over $65,000. If Bitcoin’s price dropped and you incurred a $4,000 loss, you could sell off your BTC to realize that loss, using the $4,000 to offset other taxes. The deadline to realize crypto losses in December 31st, so tax-loss harvesting is generally an end-of-year strategy. And with ZenLedger’s tax-loss harvesting tool, you get a complete overview of your unrealized gains, losses, and what amount of coins you need to sell to maximize loss.
This feature isn’t too useful for small portfolios because you’re going to incur trading fees when you repurchase the crypto you sell off. Ultimately, these fees lessen the impact of tax-loss harvesting and can even cost more than you end up saving on taxes. But for larger portfolios, tax-loss harvesting can offset up to $3,000 in taxable income per year, which is significant.
ZenLedger’s Grand Unified Accounting tool exports a spreadsheet of all of your transaction history across different exchanges and wallets. This includes a line-by-line breakdown of:
- Transaction dates and which exchange you used
- Cryptocurrencies involved
- Transaction value
- Trading fees
- Long-term and short-term capital gains
Your spreadsheet also includes calculated tax. If you’re working with a CPA to file your taxes, sending over this consolidated information is helpful.
One of the main weaknesses of many crypto tax softwares is a lack of DeFi integrations. Yes, crypto tax software covers most popular exchanges and wallets. But what if you stake, lend, or trade with various decentralized exchanges? ZenLedger isn’t perfect on this front, but supporting 30+ DeFi protocols is better than competitors like CoinTracker, which supports four protocols. Notable DeFi protocols ZenLedger supports include:
DeFi integrations aren’t as important if you solely trade on centralized exchanges like Coinbase or Gemini. But if you’re diving down the DeFi rabbit hole, know that crypto tax software has some catching up to do.
Professional Tax Help
ZenLedger integrates with TurboTax, so you import all of your transaction information into TurboTax if you’re filing taxes yourself. You can also invite your accountant to join your ZenLedger account, and there’s a professional tax suite side of the business to help CFAs manage clients. ZenLedger even offers paid tax professionals if you need assistance. This isn’t something every crypto tax software offers. Here are the three plans and their pricing:
- Consultation: $195 for a 30 minute call
- Single-Year Tax Report: Starts at $2,500 per year
- Multi-Year Tax Report: Starts at $4,500 per two years
NFTs and DeFi support is included with these plans. However, pricing depends on your tax situation, and complex returns are probably higher than these starting prices.
Are There Any Fees?
ZenLedger’s free plan lets you import and aggregate cryptocurrency transactions. You also get a basic portfolio tracking dashboard. However, viewing and downloading tax reports and using tax-loss harvesting or unified accounting requires a paid plan. Here’s how ZenLedger’s various plans compare in terms of features and annual pricing:
Transaction limits and DeFi, staking, and margin trading are the main restrictions with the Starter plan. Beginner cryptocurrency investors can probably stick with Starter, but regular traders or anyone using DeFi protocols needs Premium.
How Does ZenLedger Compare?
As mentioned, cryptocurrency tax software still has some catching up to do. This isn’t surprising given how rapidly the world of DeFi changes. This also means that, right now, it’s hard to pick a clear winner in the crypto tax software market. That said, ZenLedger stacks up well against the competition due to its number of integrations. Here’s how ZenLedger compares with CoinTracker and CryptoTrader.tax, two other popular crypto tax software platforms.
ZenLedger and CryptoTrader.Tax are two of our favorites, especially since both support over a dozen DeFi protocol integrations. CryptoTrader.Tax integrates with TaxAct, but ZenLedger has more exchange and wallet integrations, so review each option to find what’s right for you.
How Do I Open An Account?
ZenLedger lets you create an account with your email address or by connecting through Coinbase or Google. The entire signup process takes under a minute or two. Once you sign up, you have to connect a wallet, exchange, or DeFi protocol to your ZenLedger account so it can import transaction data. You can manually add transaction information with a CSV or the manual entry tool if you don’t want to connect ZenLedger with any accounts.
Is It Safe And Secure?
ZenLedger is safe and secure because you never provide your private wallet keys when connecting your exchanges and wallets. Furthermore, ZenLedger has read-only access to your transactions. ZenLedger also states it encrypts customer data and avoids personally identifiable information as much as possible to help improve security.
How Do I Contact Greenlight?
There are two ways to contact ZenLedger’s customer support. Firstly, you can email ZenLedger at email@example.com for same-day support for non-urgent questions. Alternatively, text or call (877) ZEN-TAXS from 9am to 9pm EST, Monday through Friday.
Is It Worth It?
If you own virtual currencies, you need to report that fact to the IRS. But how difficult this reporting is depends on your portfolio, trading style, and record-keeping. Software like ZenLedger is easily worth its annual price if it saves you time and helps you file taxes accurately. Furthermore, tools like tax-loss harvesting can help you save money by offsetting capital gains. Ultimately, if you need a helping hand with crypto taxes or regularly trade, software like ZenLedger is worth it. If you only have a few cryptocurrency transactions, you can try filing taxes yourself by using software like TurboTax before paying for dedicated crypto tax software.