LibraTax is one of the oldest solutions for Bitcoin taxation, launched as a startup back in 2014 in San Francisco, California. The company is on a constant upward spiral, slowly moving from tax compliance/reporting software to "management information layer" aimed at blockchain technologies.
In his recent interview, the company's CEO Jake Benson mentioned new client projects and several fresh service modules, all to be revealed in the second half of 2017. Continue reading our LibraTax review to find out more about the company and whether it is currently a good choice for you.
How LibraTax Works
As with all known tax apps, the usage of LibraTax presumes the following steps:
- Account creation – The process is simple and straightforward, so you shouldn’t encounter any major problems there. As we’ll see in the Privacy & Security section of this LibraTax review, you don’t even have to provide a valid e-mail address in order to register.
- Data import – You can import your transaction information to the platform in three different ways. You can load transactions from your CSV files by utilizing the “Import Transactions” button; you can pull Bitcoin transactions directly from the blockchain via “Manage Address” button; lastly, there’s an option for manual entry. The list of potential imports is rather small and it includes Bitstamp, Blockchain.info, BTC-e, and Coinbase for API imports and Coinbase, Blockchain.info, Bitstamp, Electrum, and a proprietary format for CSV upload imports.
- Calculations – With your account setup completed and transaction data imported, all that is left is for you to let the app perform its calculations and provide you with a comprehensive preparation for the current tax year.
The basic LibraTax package is completely free, allowing for 500 transactions. The Premium option costs $19, with up to 5,000 transactions and access to the option of a downloadable tax report. Note that the free version provides only totals, rather than individual lines required for the Form 8949. Libra Pro for business costs 49$. Its price is 99$ for accountants. The prices listed cover a full tax year of service.
The LibraTax application is divided into two integral pages. The UI layout might be seen as quite sparse, but it still remains pretty simple to operate. The first page depicts your transaction history, showing all the manually entered or imported transactions. The second page performs the calculations and offers summary information regarding your gains and losses.
There are two UI shortcomings we found to be the most confusing, as they can potentially lead to the wrong representation of your overall yearly transactions. The first one is the system used for representing purchases and sales. For every Bitcoin purchase, you should type in “1.” For every sale, you should enter “-1.” However, if you type 1 and click sale, it’ll list it as a purchase without any notification. Ergo, the use of negative values seems redundant and completely unnecessary. The minimum of entries displayed per page is 25, which is way too much as it requires constant scrolling with a data-filled page.
Other than that, the table entry is rather useful, with a good filtering system and column sorting. Each entry features a corresponding note field, enabled to include a #tag. The said notes can also be filtered via filtering box, but only by words. However, the imported data will not be tagged automatically, which would definitely be a very useful feature. Note that the app is designed for the US market, so it won’t accept non-US date formats from your browser preferences. This came up as an issue for some Canadian users.
LibraTax can import individual addresses, which is the quickest and simplest way of handling the process. Having said that, only Bitcoin addresses are eligible for import alongside a thousand of your latest transactions. We reckon this limit should satisfy the importing need of most people.
LibraTax performs very fast while under the “light usage” category. Trying to use any substantial amounts of data will result in a much lower “frame rate.” So, it’ll take around 4-6 minutes to upload 5k Bitstamp transactions, instead of 4 seconds, as seen on BitcoinTaxes.
The cost basis methods include:
- Average Costing
- Optimized LibraTax
- Long-Term then HPFO
Privacy & Security
Credit card payment doesn’t require your name and address. Anonymous payment definitely has its own appeal, but it opens up the floodgates for underhanded endeavors.
- Simplicity of the interface
- Integration with BitGive, assisting when highlighting tax benefits from charitable donations
- LIFO, FIFO, and an optimized method of cost basis for capital gains minimization
- Frequent need for manual editing due to inaccurate and inconsistent importing
- Required payment before accessing or viewing the CSV file for Form 8949
- The CSV file can’t be imported into the e-File software and often features rounding errors