In many countries only your realized profit counts and I believe this to be the only clear and fair way of taxing crypto. This means that if you spend 1000 of fiat currency, traded for a year and sold everything back for fiat your profit is the difference between 1000 and that new number.
In countries where unrealized profits are taxed you add the fiat value of every coin that you own (without selling it) and subtract 1000. What you are left with is your profit.
Topic: Trading and Taxes (Read 225 times)
In the UK any crypto to crypto trade is a taxable event (as well as crypto to fiat), and is liable for capital gains tax. There is a decent minimum threshold though, £12k for 2019-20, a bit lower for previous years. Gains below that you pay nothing.
If you can't find a tool to do it, you'll need to do what I did, which is download your records from every exchange. Of course there is the added complication of converting to/from US dollars as well, for which you'll need the exchange rate... If you trade a lot it can be painful.
I downloaded my records and found an accountant who can work with crypto - there are some about if you look, and probably cheaper than the massive time investment you'd make working it all out yourself.
If anyone in the UK has any tax questions, feel free to PM me and I'll try to assist.
If you can't find a tool to do it, you'll need to do what I did, which is download your records from every exchange. Of course there is the added complication of converting to/from US dollars as well, for which you'll need the exchange rate... If you trade a lot it can be painful.
I downloaded my records and found an accountant who can work with crypto - there are some about if you look, and probably cheaper than the massive time investment you'd make working it all out yourself.
If anyone in the UK has any tax questions, feel free to PM me and I'll try to assist.
How am I supposed to know if I am in profit or a loss if I have been trading across multiple exchanges? For example, if I bought $1,000 in Bitcoin on Coinbase, transferred it over to multiple exchanges, and purchased other coins with that $1,000. Is it as simple as downloading the tax reports from the exchanges?
If the country you live in have a regulated environment for cryptocurrencies and the law is explicit about the tax on your crypto profits, then it should be easy enough to calculate it. You need calculate the difference between Deposit and Withdrawals from/to your bank account and Coinbase, then apply the tax percentage to that and you should be fine.
For your example: If you buy Bitcoin with $1000 (0.12 BTC) then you trade here and there and make 1 BTC, and after 2 months you decide to withdraw $1500 (0.2 BTC) from Coinbase to your account, then you must pay tax on $500 to your local authorities. If you keep the remaining 0.8 BTC on your personal bitcoin wallet you don't have to pay any tax on it. Is more like you deposit $200 to an online casino and win $600, but you don't withdraw anything from the casino, you don't pay taxes for your winning unless you decide to withdraw the money.
Note:
- this is the procedure in my country.
- I use Kraken for depsits and withdrawals.
A taxable event only occurs when you exchange bitcoin for another currency or spend it on a good or service. I track my activity independently but as several have mentioned here there are apps that will track it for you too. The problem is that if you're using multiple exchanges, then each exchange may have an app that you'd have to coordinate or cross-reference/reconcile. And if you manage in a third party app you're still tracking the transaction buy price, sell price, and dates manually.
Are your transactions all trading? Which exchange is home to the bulk of your currency to currency trading?
Are your transactions all trading? Which exchange is home to the bulk of your currency to currency trading?
How am I supposed to know if I am in profit or a loss if I have been trading across multiple exchanges? For example, if I bought $1,000 in Bitcoin on Coinbase, transferred it over to multiple exchanges, and purchased other coins with that $1,000. Is it as simple as downloading the tax reports from the exchanges?
You can use a portfolio manager tool to get the current value of your portfolio or you can maintain your own excel sheet where you can enter the current USD value of the coins you hold. Multiple the fund value with the funds you hold and sum the USD value you get. Doing manually is hectic but if you have less coins in portfolio and if you are not checking frequently than manually calculating is cost effective.
You should build and track your trading portfolio there are some tools that you can use to track them.
Sample Binance you can follow the guide on exporting your all trading history from Binance. Once you have done on exporting your trading history from binance you will need a tracking tool to calculate your all profit and loss including fees like this tool https://cointracking.info/import/binance/index.php
Sample Binance you can follow the guide on exporting your all trading history from Binance. Once you have done on exporting your trading history from binance you will need a tracking tool to calculate your all profit and loss including fees like this tool https://cointracking.info/import/binance/index.php
good service---it's what i'm using this year. automatic fair market value calculation is a life saver. and they give a 5% discount when you pay with BTC.
check your imports carefully though. they screwed up the cost basis on some positions of mine, which i had to fix manually.
it's still the best tax portfolio tracker i've found. unfortunately the free plan only covers 200 transactions. most altcoin traders will need the pro package, which costs $120 per year.
Tax office in my country gave very simple instructions regarding crypto trading.
We don't need to report anything before we exchange crypto to fiat.
At that moment we have to report our crypto earnings to the Tax office and show FIFO evidence to them.
If through FIFO evidence we can prove that we hold crypto funds at least 2 years we don't need to pay any taxes.
Otherwise, we have to pay 12 % taxes.
We don't need to report anything before we exchange crypto to fiat.
At that moment we have to report our crypto earnings to the Tax office and show FIFO evidence to them.
If through FIFO evidence we can prove that we hold crypto funds at least 2 years we don't need to pay any taxes.
Otherwise, we have to pay 12 % taxes.
You can use a portfolio manager to help you keep track of your transactions, trades, profits and losses. There are quite a number of trusted portfolio managers out there. All you have to do it export the API keys of the og the different exchanges you use into the platform.
I personally use
1. BitUniverse (Mobile App)
2. Delta Crypto portfolio manager (mobile app)
3. 3Commas (both mobile and Web platform)
I personally use
1. BitUniverse (Mobile App)
2. Delta Crypto portfolio manager (mobile app)
3. 3Commas (both mobile and Web platform)
How am I supposed to know if I am in profit or a loss if I have been trading across multiple exchanges?
You should build and track your trading portfolio there are some tools that you can use to track them.Sample Binance you can follow the guide on exporting your all trading history from Binance. Once you have done on exporting your trading history from binance you will need a tracking tool to calculate your all profit and loss including fees like this tool https://cointracking.info/import/binance/index.php
For example, if I bought $1,000 in Bitcoin on Coinbase, transferred it over to multiple exchanges, and purchased other coins with that $1,000. Is it as simple as downloading the tax reports from the exchanges?
It's simple but it is not simple as downloading tax reports. If you follow the guide carefully from the link above you can calculate all of your profit, fees, and losses using the tracking tool above.
You can see all supported exchanges from their front page here https://cointracking.info/ they also have old announcement thread from here https://bitcointalksearch.org/topic/cointracking-profitloss-portfolio-and-tax-reporting-for-digital-currencies-220238
The exchange used is irrelevant. It’s the trades that matter. I don’t see how multiple exchanges has any effect on your gains or losses whatsoever.
How am I supposed to know if I am in profit or a loss if I have been trading across multiple exchanges? For example, if I bought $1,000 in Bitcoin on Coinbase, transferred it over to multiple exchanges, and purchased other coins with that $1,000. Is it as simple as downloading the tax reports from the exchanges?
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