How to Optimise Your Crypto Tax Reports Using KoinX Tax Settings
Navigating the world of crypto taxes can be overwhelming, especially with ever-changing regulations and diverse transaction types.
KoinX simplifies this process through its fully customisable tax settings, enabling you to tailor your tax reports to match your unique financial situation and strategic goals.
By fine-tuning these settings, you can ensure compliance with tax regulations and optimise your tax outcomes, potentially lowering your liabilities and enhancing reporting accuracy.
Customisable Tax Settings
KoinX provides a range of tax settings that let you control how different types of crypto transactions are classified and reported.
After you fill in your basic details like country, preferred currency, etc., you are ready for integration.
Here’s a detailed look at each setting, along with practical examples to guide you:
To get to this page-
Log in to your account on KoinX.
Complete your integration process
- Complete profile set-up and integrations (opens in a new tab) of wallets/exchanges.
Select Tax Setting from the side navigation bar
- Click on Tax Settings, scroll down to Transaction Settings.
Make sure you have your country's currency.
Select your desired settings from the options below -
Treat Airdrops as Income
- Enabled:
- Airdrops are classified as taxable income at the time of receipt.
- Example: If you receive an airdrop worth $1,000, it is immediately recognised as income.
- Disabled:
- Airdrops are treated as capital gains only when sold, potentially delaying the tax event.
Treat Other Gains as Capital Gains
- Enabled:
- Gains derived from rewards, staking interest, or airdrops appear under the capital gains section.
- Disabled:
- These gains are recorded under “Other Income,” which might impact your overall taxable income differently.
Treat Crypto-to-Crypto Trades as Taxable
- Enabled:
- Trades between different cryptocurrencies will generate taxable capital gains or losses.
- Example: Exchanging Bitcoin for Ethereum will trigger a taxable event based on the price difference.
- Disabled:
- Crypto-to-crypto trades are not considered taxable events unless the crypto is converted into fiat currency.
Treat Rewards as Income
- Enabled:
- Rewards received are valued at market price at the time of receipt and classified as income.
- Disabled:
- Rewards are only treated as capital gains upon sale, which can defer the tax event.
Treat Interest as Income
- Enabled:
- Staking or lending interest is treated as taxable income as soon as it is earned.
- Example: Earning $500 in staking interest will be recorded as income.
- Disabled:
- Interest earnings are instead treated as capital gains when the asset is sold.
Treat External Deposits as Income
- Enabled:
- Any tokens or funds deposited from external sources are recorded as income.
- Example: Depositing tokens worth $2,000 will be immediately recognised as income.
- Disabled:
- External deposits are considered part of your cost basis for future disposals.
Treat External Withdrawals as Sale
- Enabled:
- When you withdraw tokens to an external wallet, it is treated as a taxable sale, generating capital gains or losses.
- Example: Withdrawing tokens valued at $1,500 is treated as a sale.
- Disabled:
- Withdrawals do not trigger immediate tax implications unless the assets are sold later.
Treat Loan Repayment as Sale
- Enabled:
- Loan repayments made with crypto are classified as sales and are subject to capital gains tax calculations.
- Example: Repaying a loan with tokens worth $800 will have its gains or losses computed.
- Disabled:
- Loan repayments are treated as "Other Income," affecting your income tax calculations.
Offset Brokerage Fees in Trades
- Enabled:
- Brokerage fees are integrated into purchase and sale prices, offering a more accurate net profit or loss calculation.
- Example: Buying 1 BTC for $100 plus a $10 fee and selling for $200 minus a $20 fee will result in a net profit calculation that factors in these fees.
- Disabled:
- Brokerage fees are not considered in the profit calculation, and profits are based solely on the transaction amounts.
How to Use These Settings Effectively
Review Your Transaction History
Before adjusting any tax settings, carefully review your historical transaction data. Understanding how past transactions were recorded helps you assess the potential impact of each setting on your overall tax report.
Align Settings with Your Tax Strategy
Your tax strategy might minimise taxable income or optimise capital gains. Adjust settings such as treating airdrops, rewards, or crypto-to-crypto trades accordingly. For instance, if you prefer to defer tax liabilities, you might disable settings that trigger income recognition immediately.
Regularly Update Your Settings
Cryptocurrency regulations and market conditions are constantly evolving. Regularly review and update your tax settings to ensure your reports remain accurate and compliant with the latest tax laws.
Leverage KoinX Analytics
Use the detailed analytics provided by KoinX to see the impact of your settings in real time. This can help you fine-tune your approach and identify any discrepancies or opportunities for optimisation.
Consult a Tax Professional
While KoinX’s tax settings offer powerful automation and customisation, consulting with a tax professional who understands cryptocurrency is wise. Their guidance can ensure that your settings align with current laws and that you’re taking full advantage of potential deductions and strategies.
Conclusion
KoinX’s flexible tax settings empower you to optimise your crypto tax reports, ensuring that every transaction is accurately classified and that your tax liabilities are minimised.
By understanding and adjusting these settings, from how airdrops and rewards are treated to the inclusion of brokerage fees, you can tailor your reporting to fit your unique tax strategy.
Take control of your crypto taxation with KoinX and experience a smarter, more efficient way to manage your digital asset portfolio.