64 lines
3.6 KiB
Markdown
64 lines
3.6 KiB
Markdown
## Cryptocurrency tax reporting
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<div class=pagetoc>
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</div>
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(This is the README in the hledger repo's `examples/csv/cctax/` directory,
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also published as the [Cryptocurrency tax reporting] page on hledger.org.)
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<!-- This page can be viewed on github or hledger.org, so use absolute urls -->
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[Cryptocurrency tax reporting]: https://hledger.org/cctax.html
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In this directory we are not concerned with importing to hledger,
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but with exporting from hledger to cryptocurrency tax calculators.
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Why do this ? In most countries, the revenue and capital gain or loss incurred from
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receiving/selling/trading cryptocurrencies is taxable and must be itemised and reported.
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There are several aspects to this:
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1. Calculating income.
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2. Calculating capital gains.
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3. Calculating actual taxes owed.
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1 (income) is relatively easy to do with hledger.
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3 (tax owed) requires knowledge of current tax rules and is often handled by specialised tax preparation software.
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2 (gains) can be complex. Depending on your country's tax rules, it may require
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- tracking the original cost, date, and wallet of every purchase/acquisition over your lifetime
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- tracking their movements/splits/merges
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- selling/disposing them in a precise mandated order
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- and thereby calculating the capital gains or losses.
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Centralised exchanges will calculate gains for you,
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but self-custodied wallets, decentralised exchanges, or other defi apps won't;
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there you are responsible for calculating gains.
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There are several ways you could tackle this:
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1. Calculate gains using only hledger,
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by keeping track of each lot and lot movement with subaccounts,
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and selecting the appropriate lots/costs in disposal transactions.
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This is intuitive and robust. But also tedious, and above a certain level of activity it becomes unmanageable.
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2. Calculate gains using the built-in lot tracking syntax of Ledger or Beancount. Beancount's is more robust.
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These may be too limited to calculate gains accurately, eg when there are inter-wallet transfers.
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3. Online cryptocurrency tax calculators (Bitcoin.Tax, Cointracker, Coinledger, Koinly, Summ, TokenTax..)
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These let you upload transaction history from all of your cryptocurrency activities.
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Then they analyse this data, identify what happened (you may need to add configuration here), and provide gains reports.
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These apps are convenient and featureful, eg they may understand your country's tax rules; but they also add rather serious privacy risk.
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When they are hacked or infiltrated, potentially your entire past, present and future cryptocurrency activities can be analysed.
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4. Offline cryptocurrency tax calculators. These tend to be more private.
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- rotki - AGPL/freemium, featureful, does not support US yet (wallet-based cost tracking, https://github.com/rotki/rotki/issues/2438)
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- RP2 - Apache, does not support US yet (https://github.com/eprbell/rp2/issues/135)
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- BittyTax - AGPL, UK and US variants (can do wallet-based cost tracking by using multiple configs)
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So the main focus here is exporting to offline tools.
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These require CSV data in a specific format; examples are collected here.
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Each record represents an event in a particular cryptocurrency wallet.
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There are basic events like deposit, withdrawal, buy, sell, expense, income; and some more specialised event types.
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These tools usually provide general gains reports, which you must interpret or adjust according to your country's tax rules.
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In the US, universal cost tracking was used through 2024; from tax year 2025, per-wallet cost tracking is required.
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The "Safe Harbor" rule allows you to allocate pre-2025 lots to specific wallets (once), which could help optimise taxes in some cases.
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