How to Easily Keep Track of Your Crypto Taxes

Cryptocurrency taxes can be complex and confusing, but keeping track of your cryptocurrency transactions and correctly reporting them to the relevant tax authorities is essential. 

Failure to do so can result in significant legal and financial consequences like penalties, interest charges from the tax authorities, criminal investigation or even jail time in severe cases.

On the other hand, keeping track of your transactions and tax obligations can also help you to maximize any tax benefits that may be available, such as deductions for trading expenses or losses from cryptocurrency sales.

Crypto taxes

Table of Contents

Important notice: Do your research.

Our content is intended to be used and must be used for informational purposes only. It is not intended to provide investment, financial, accounting, legal, tax, or other professional advice.

It is essential to research and verify any information you find on this website or any other website.

How to Keep Record of all Your Cryptocurrency Transactions

Keeping a record of your cryptocurrency transactions is essential to managing your cryptocurrency portfolio. 

Transactions can be manually recorded and tracked, an maybe this is the best option for those people who make a few monthly or yearly transactions:

– Choose a reliable wallet: Start by selecting a secure and reliable cryptocurrency wallet that can keep track of your transactions and balances. Make sure to choose a wallet that supports all the cryptocurrencies you hold.

– Create a spreadsheet: Create a spreadsheet where you can record all your cryptocurrency transactions. You can use a tool like Google Sheets or Microsoft Excel.

– Record transactions: For each transaction, record the date, the amount, the type of cryptocurrency, the address it was sent from and received to, and any relevant notes.

– Update regularly: Make sure to update your spreadsheet regularly to ensure that it is up-to-date and accurate. You should also make regular backups of your spreadsheet to prevent data loss.

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But keeping track of every single transaction can be very demanding and time consuming for people who make regular transactions.

Especially when it come to small regular transactions generated by daily, weekly, or monthly interest payments or rewards.

In this case, your best option is:

– Use a cryptocurrency tracking tool: You can also use a cryptocurrency tracking tool to keep track of your transactions. Several tools allow you to import your transactions from exchanges and wallets and automatically keep track of your balances and gains/losses.

Cryptocurrency transactions

Many cryptocurrency tracking tools are available, and deciding which is the best can get complicated for newbies.

If you don’t know how to start, you may consider opening free accounts for both Koinly and CoinTracking and learning from using them.

Use hands-on experience rather than reading tens of reviews that will leave you confused and still undecided on which product to use to track your portfolio and taxes.

Koinly Tax Software

Koinly is one of the most popular tax software tools that you can use to easily track all your transactions, calculate your capital gains and create the tax documentation that you need for the country you live:

Import your trades: Add your exchange accounts via API or CSV and connect your blockchain wallets using public addresses.

Preview the capital gains: Get a glimpse of your profit/loss for any tax year. For Free.

Download your tax documents: Generate the crypto tax you need, for the country where you need to pay taxes.

Koinly crypto taxes calculator

You can create a Koinly free account, preview your gains or losses and decide if you need to pay for a plan or not.

But if you have hundreds or even thousands of transactions, koinly may save you many tens of hours of manual taxes calculations.

Koinly Prizing

You can open a Free Koinly account that gets you most of the features except for tax reporting. For example: 

– Portfolio tracking.

– Capital gains preview, so even with the free plan you can know if you have profits, losses, and capital gains that you need to report to the tax authorities.

On the Koinly prizing page you can review the plans’ features, limitations, and prizing.

For example, when writing this post in February 2023, this would be the tax plan cost for someone who has to pay taxes in Germany.

The plan’s cost depends on the number of transactions you have made during the year.

Koinly tax report prizing

CoinTacking Portfolio Manager and Tax Software

CoinTracking was launched in 2013 and is the world’s first crypto portfolio manager and tax reporting tool.

CoinTracking crypto taxes calculator

If in addition to tax reporting you need a portfolio manager, CoinTracking is your tool:

– Calculate your historical balances and profits

– Check coins and currencies on each exchange

– View current balances

– Review your realized and unrealized gains

– And, of course, calculate your taxes for the country where you need to pay taxes

CoinTracking has created a series of 16 videos where they explain everything you need to know about how to setup an account and use all the product features.

CoinTracking Prizing

You can open a free CoinTracking account, start using the features and decide if this tool is suitable for your needs.

In the CoinTracking prizing page you can browse the available features for each of the plans. 

Take note that you will be able to import your exchange transaction via CSV but the free plan does not include automatic exchange imports via API or API access to your portfolio.

KoinTracking plans prizing

Do You Own Crypto taxes?

Cryptocurrency taxation can be complex, and it varies from country to country. 

If you are not sure what are the crypto tax obligations in the country you live in, you need to do some research. 

But, if you don’t know where to start, you can have a look at this article from Technopedia about how are crypto taxed around the world.

Also, Koinly does write many interesting articles that can be of interest, like ‘How is Crypto Taxed Around The World in the 2020-2021 Tax Year‘.

In any case, you need to have a general understanding of what crypto events are taxable or non-taxable.

Important notice: Do your research.

Our content is intended to be used and must be used for informational purposes only. It is not intended to provide investment, financial, accounting, legal, tax, or other professional advice.

It is essential to research and verify any information you find on this website or any other website.

Crypto Taxable Events

There are some common taxable events that you should be aware of. 

These events can trigger tax obligations, such as capital gains tax, income tax, or other forms of taxation:

– Crypto-to-Fiat Transactions: When you sell cryptocurrency for fiat currency (like USD, EUR, etc.), it is considered a taxable event. The profit or loss from the sale is subject to capital gains tax. The difference between the purchase price and the sale price determines the taxable gain or loss.

– Crypto-to-Crypto Trades: Exchanging one cryptocurrency for another is also a taxable event in many jurisdictions. This is treated as a capital gain or loss, and you need to calculate the value in fiat currency at the time of the trade for tax purposes.

– Mining Rewards: If you mine cryptocurrencies, the coins or tokens you receive as rewards are typically considered income. The value of these rewards at the time of receipt is subject to income tax.

– Staking Rewards: Earning staking rewards by holding and supporting a proof-of-stake blockchain can also be taxable. These rewards are usually considered income when received.

– Airdrops and Forks: When you receive new tokens as a result of a blockchain fork or an airdrop, they may be subject to income tax at their fair market value at the time of receipt.

– Interest on Crypto Savings Accounts: Some platforms offer interest for holding cryptocurrencies in their savings accounts. The interest income may be taxable.

– Gifts and Donations: If you give or receive cryptocurrency as a gift, it may be subject to gift tax or income tax, depending on your jurisdiction’s rules. Donations of cryptocurrency to eligible charities can sometimes result in tax deductions.

– Spending Cryptocurrency: Using cryptocurrency to purchase goods or services can trigger capital gains tax if the value of the cryptocurrency has increased since you acquired it. This is often referred to as a “crypto-to-goods” transaction.

– Margin and Futures Trading: Trading cryptocurrencies on margin or through futures contracts can lead to complex tax consequences, including potential income tax or capital gains tax on gains and losses.

Selling NFTs: Do not forget about NFTs. Like any other crypto assets, selling and NFT is a taxable event that needs to be reported.

Crypro Non-Taxable Events

As well as knowing and understanding the taxable events, do not pay extra taxes by learning and understanding the non-taxable events:

– Buying Cryptocurrency: When you purchase cryptocurrencies with fiat currency, it is generally not a taxable event. You are simply exchanging one form of currency for another.

– Holding Cryptocurrency: Holding or “HODLing” cryptocurrency without engaging in any transactions does not create a tax liability. You only incur taxes when you realize a gain or loss by selling or using the cryptocurrency.

– Transferring Between Your Wallets: Transferring cryptocurrency between your own wallets, such as from a hardware wallet to a software wallet, is usually not a taxable event. This is because you are not changing the ownership or disposing of the assets.

– Gifting Cryptocurrency: Gifting cryptocurrency to another person may not trigger immediate taxes for either the giver. However, there may be gift tax implications, depending on the amount and local tax laws. 

Crypto Taxes FAQ

The questions from other people are windows to knowledge that maybe we need, but we never consider we missed.

In most countries, including the United States, cryptocurrency is considered a taxable asset and must be reported on tax returns. 

The specific reporting requirements may vary depending on the country and the nature of the transaction, so it’s essential to consult with a tax professional or refer to the relevant tax authorities for specific guidance.

In general, each sale or exchange of cryptocurrency should be reported on your tax return. This is because any gains or losses on these transactions may be subject to taxation. 

However, the specific reporting requirements may vary depending on the country and the nature of the transaction. In the United States, for example, the IRS requires taxpayers to report each sale or exchange of cryptocurrency and the cost basis and fair market value at the time of the transaction. 

It’s important to keep accurate records of your cryptocurrency transactions to ensure you report them correctly and minimize the risk of errors or audits. 

It’s always a good idea to consult with a tax professional or refer to the relevant tax authorities for specific guidance on reporting requirements for cryptocurrency transactions in your country.

If you exchange one cryptocurrency for another, it is still considered a taxable event in most countries, including the United States. This is because the exchange may result in a gain or loss, depending on the value of the two cryptocurrencies at the exchange time.

Generally, the taxable amount is calculated by subtracting the cost basis (the original purchase price) of the cryptocurrency being sold from the fair market value of the received cryptocurrency. The resulting gain or loss must be reported on your tax return, and any applicable taxes must be paid.

It’s important to keep accurate records of your cryptocurrency transactions, including exchanges, to ensure you are reporting them correctly and to minimize the risk of errors or audits. 

It’s always a good idea to consult with a tax professional or refer to the relevant tax authorities for specific guidance on reporting requirements for cryptocurrency transactions in your country.

If you exchange cryptocurrency for other property, such as goods, services, or other assets, it is still considered a taxable event in most countries, including the United States. 

This is because the exchange may result in a gain or loss, depending on the value of the cryptocurrency at the time of the exchange and the fair market value of the property received in exchange.

Generally, the taxable amount is calculated by subtracting the cost basis (the original purchase price) of the cryptocurrency being sold from the fair market value of the received property. The resulting gain or loss must be reported on your tax return, and any applicable taxes must be paid.

It’s important to keep accurate records of your cryptocurrency transactions, including exchanges for other property, to ensure you are reporting them correctly and to minimize the risk of errors or audits. 

It’s always a good idea to consult with a tax professional or refer to the relevant tax authorities for specific guidance on reporting requirements for cryptocurrency transactions in your country.

Receiving cryptocurrency as a gift or donation is still considered a taxable event in most countries, including the United States. The taxable amount would be based on the fair market value of the cryptocurrency received at the time of the gift or donation.

In the United States, for example, the IRS requires taxpayers to report any gifts or donations of cryptocurrency valued at $15,000 or more and any resulting gains or losses on those gifts or donations. It’s essential to keep accurate records of any cryptocurrency gifts or donations you receive, including the fair market value at the time of receipt, to ensure you are reporting them correctly and to minimize the risk of errors or audits.

It’s always a good idea to consult with a tax professional or refer to the relevant tax authorities for specific guidance on reporting requirements for cryptocurrency transactions, including gifts and donations, in your country.

No, you don’t. As long as you own both wallets, there’s no tax to pay on transfers. 

In general, transfers of cryptocurrency from one wallet to another are not considered taxable events in and of themselves. However, if the transfer results in a taxable event, such as the sale or exchange of cryptocurrency, you may have a tax obligation.

For example, if you transfer cryptocurrency from a personal wallet to an exchange and then sell the cryptocurrency, the sale is considered a taxable event and you may be required to report the gain or loss from the sale on your tax return.

It’s important to keep accurate records of your cryptocurrency transactions, including transfers, to properly report any taxable income to the relevant tax authorities.

It’s also important to consult a tax professional for specific guidance on the tax treatment of cryptocurrency transfers in your country or jurisdiction, as the tax laws and regulations surrounding cryptocurrency can be complex and subject to change.

The tax treatment of mining, staking, and hard forks can vary based on specific circumstances and jurisdiction. However, in the United States and many other countries, the general principles are as follows:

– Mining: Cryptocurrency mining is treated as taxable income in the year it is earned. The value of the cryptocurrency mined is considered the fair market value of the cryptocurrency at the time it was received.

– Staking: Staking rewards received for holding and supporting a cryptocurrency network may be considered taxable income in the year they are received. The value of the staking rewards is considered to be the cryptocurrency’s fair market value at the time it was received.

– Hard Forks: A hard fork occurs when a cryptocurrency splits into two separate cryptocurrencies. In this case, the fair market value of the new cryptocurrency received as a result of the hard fork is considered taxable income in the year it is received.

It’s important to properly report any taxable income to the relevant tax authorities to keep accurate records of all cryptocurrency-related activities, including mining, staking, and hard forks.

It’s also important to consult a tax professional for specific guidance on the tax treatment of mining, staking, and hard forks in your country or jurisdiction, as the tax laws and regulations surrounding cryptocurrency can be complex and subject to change.

If you forgot to pay your crypto taxes, it’s important that you take action to rectify the situation as soon as possible. 

Failing to pay your taxes can result in penalties and interest charges, which can add up quickly over time. Here are some steps you can take:

– Determine the amount you owe: Start by calculating the amount of taxes you owe on your crypto gains. This will depend on your income tax bracket and the length of time you held your crypto assets.

– File your taxes: Even if you missed the deadline for filing your taxes, you should still file as soon as possible. The longer you wait, the more penalties and interest charges you may incur.

– Pay any taxes owed: Once you’ve determined the amount you owe, make arrangements to pay the taxes owed. You may be able to pay the amount in full, or you may need to set up a payment plan with the IRS.

– Consider seeking professional help: If you’re unsure of how to proceed or if you need help with your tax calculations, consider seeking the advice of a tax professional. They can help you understand your obligations and ensure that you’re taking the right steps to resolve the situation.

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