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/FAQ/General Questions/Tax Reporting for Automated Cryptocurrency Trading

Tax Reporting for Automated Cryptocurrency Trading

Automated cryptocurrency trading platforms like Bitsgap can simplify and enhance your trading experience, but tax reporting for multiple trades across exchanges can be complex. Here’s a concise guide to help you navigate tax reporting efficiently.

What Taxes Apply to Cryptocurrencies?

Cryptocurrencies are often treated as assets or investments by governments. For example:

  • In the U.S., the IRS classifies cryptocurrencies as property.
  • Selling crypto at a profit (capital gains) may incur capital gains tax.

Even if you trade on crypto-to-crypto markets or use automated strategies, maintaining accurate records of your trades is essential to determine your taxable gains or losses.

What Records Should You Keep?

To streamline tax reporting, ensure you keep:

  • Trading History: Export CSV or Excel files with your transactions from each exchange. Most centralized exchanges provide this feature.
  • Manual Records: If you use decentralized exchanges without downloadable transaction histories, log trades manually to avoid missing key details.

At the end of the year, you can upload these records into cryptocurrency tax tools or calculate taxes manually using spreadsheet editors.

What Tax Software Can Help?

Specialized cryptocurrency tax tools simplify the reporting process by importing trading histories and generating tax reports. Examples include:

  • CoinTracking
  • Koinly

These tools integrate with exchanges, reducing the time and effort needed to prepare accurate tax reports.

What Forms Should You Complete?

Tax reporting requirements vary by country. For instance:

  • In the U.S., you’ll need to complete IRS Form 8949 to report capital gains and losses.
  • Use your trading history to document every trade, calculate total gains or losses, and summarize your net position for the year.

For more detailed guidance, consult a tax professional or review your local tax regulations.

Need Assistance?
If you encounter any issues or have questions, don’t hesitate to contact the Bitsgap Customer Support Team.