I hope you are all well and having a great day, welcome to CryptoGod-1's blog on all things crypto. Today I will be doing a write up about a feature I noticed on BINANCE and think is a very interesting addition, the Binance Tax Calculator. Still in Beta mode and limited in it overall capabilities, this is certainly something which once further developed will create a very beneficial tool for all who make use of Binance for their crypto trading.
What is a Crypto Tax Calculator?
To cover the basics first, a Crypto Tax Calculator is an application which a user can link all of their taxable transactions into in the aim of getting a taxable report and total amount due from it. There are many available on the market, most of which are accessed via user plans. It helps users discover their total; capital gains along with any loses they have incurred, while being specific to the tax rules which apply in their nation.
In terms of crypto it can be quite daunting for individuals to generate their tax returns given the sheer amount of transactions which can occur. From staking to margin trading, airdrops to future positions, a tax calculator can calculate the overall amount of taxable transactions from all of your accounts. This generally just involves setting up API key access, although sometimes there is a need to manually input the data via a CSV spreadsheet.
Once all of the data has been inputted, the calculator assigns each transaction a specific title, so a user can distinguish between staking income and profits from trading. It then complies the taxable amount, or write off amount in a useful document which a user can download (generally after subscribing, which is usually done on a tier base depending on the number of transactions processed).
Some of these are include below, but this list is not exhaustive and it is not limited to just these:
1. CoinTracker
2. Koinly
3. CRYPTO.COM Tax
4. CoinLedger
6. CryptoTaxCalculator
7. ZenLedger
8. Cointelli
9. Coinpanda
10. CoinTracking
11. TokenTax
It is important to ensure the calculator is reputable, and available to calculate taxes in your local region. A lot of countries have different tax rules and many have to pay taxes at different times of the year, so it can be useful to check and double check this information and the capability of any chosen tax calculator before signing up. Most will allow a user to connect their wallets and exchanges without needing to sign up, only requiring payments once a tax report is required, which as noted above is often based upon the number of transaction in the chosen tax year.
Binance Tax Calculator
Enter Binance, one of the worlds largest and most popular cryptocurrency exchanges. They handle almost everything and anything, so why not your taxes? That's exactly what they thought, and they are willing to do the same work as the tax calculators for FREE! A user simply needs to log into Binance, click into the Binance Tax section and they are all set to go. Binance tax is entirely free for anyone who needs to prepare their crypto taxes. What's more, you can include up to 100k transactions!
However, there is a slight catch currently. Binance Tax is still in Beta mode and not available globally, For example when I log into my account I am informed that it is not currently available in my region. From the bit I have managed to read on it, it is currently available in France, and possibly other locations worldwide.
Still, lets not have that stop us examining the feature. Currently when a user wants to create a tax report from Binance they need to set up and API key and import that elsewhere, such as into a tax calculator. This could also require a CSV file depending on how complicated your transactions have been. With Binance Tax there will be no need for that, as the built in Tax Calculator will have access to all of your information already. From signing up it will be aware of your region and tax implications in terms of the local and national laws, and all transaction will be automatically input from your account data.
Of course like any Tax Calculator there is the disclaimer, which includes the fact that Binance Tax is currently not capable of including all transaction undertaken on other relevant exchanges, that the tax report is not a legal document, and that other tax liabilities may not be included. While this is true of all tax calculators, in the sense that it can only calculate from the data it is given, it is important to have a good understand of your own liabilities along with what the report determines. Also to note that NFT transactions are not covered in the calculator, which seems to be a common issues with many Tax Calculators.
So thats what Binance Tax is hoping to bring to the table. A built in all in one location where a user can manage all their Tax responsibilities in one place. No need for API keys or exporting files to input elsewhere as Binance will be able to calculate and likely update on an ongoing basis in terms of what is owed tax wise. Of course is you withdraw your crypto to a personal wallet or different exchange then it will not be able to conclude the taxation requirements for that specific crypto, but at least you can be certain that all your transaction on Binance will be included. If nothing else, it could certainly reduce the amount of transactions required to be submitted into a different calculator, which of course are charged by the amount of transactions. Every bit helps, and I am looking forward to seeing this feature roll out and be useable by everyone.
Have a great day.
CryptoGod-1.
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