Do you need to import data from your self-custodied crypto wallets like Ledger, Trezor, MyEtherWallet, MetaMask, or Coinbase Wallet to do your crypto taxes?
Sometimes yes. Sometimes no.
Let's dive in.
What types of transactions are needed to generate your tax reports?
To properly generate your crypto gains, losses, and income reports, CryptoTrader.Tax needs all of the data that makes up your taxable events.
A taxable event is simply a scenario that triggers a tax reporting requirement. Whenever you incur a taxable event, you trigger income of some sort that needs to be reported on your taxes.
The following transaction types are key for CryptoTrader.Tax to accurately calculate the income associated with your taxable events:
Each of these transaction types are crucial for setting your cost basis in a given cryptocurrency or determining the gain or loss when you dispose of a cryptocurrency.
What transaction types are not necessary for CryptoTrader.Tax to accurately calculate your taxes?
CryptoTrader.Tax does not need your wallet transfer data because wallet transfers do not trigger a taxable event. Simply sending crypto from one wallet you own to another wallet you own is not considered a disposal of your cryptocurrency, and thus, it does not trigger a capital gain.
CryptoTrader.Tax keeps a global balance of all cryptocurrencies owned at any given time, so no matter where you transfer your crypto, the application keeps track of the fact that you own it. It will only detect that you do not own coins any longer when you show the application that you have sold, traded, or otherwise disposed of your crypto.
So when DON'T I need to import the data from my wallet?
If you only used your self-custodied wallet to transfer and hold cryptocurrencies that you own, you do not need to import it into CryptoTrader.Tax.
Why is this?
It's because you haven't incurred any taxable events in this wallet.
The application knows you hold the coins—even if you transferred them off of the exchange you originally bought them on.
So when DO I need to import the data from my wallet?
If you incurred a taxable event from within your wallet, you will need to get that data into CryptoTrader.Tax. These events include:
Crypto received as income
For example, if you swapped one crypto for another by connecting your wallet to a decentralized exchange (DEX), you will need to get that swap into CryptoTrader.Tax. You can do this by adding that swap to the Other Exchange CSV template and importing it on Step 1.
If you earned interest, staking, or mining rewards directly to a self-custodied wallet, you would also need to import these transactions. You can import staking, interest, mining and other "ordinary income" transactions by adding them as incoming transactions within Step 2.
Have any questions?
Our team is always happy to clear up any questions you have about your crypto taxes. Just send us a message!