What You Must Know About Binance Taxes & Binance Tax Reporting

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November 3, 2021
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    Tax reporting enables you to keep a record of your crypto activities and also verifies that you are meeting the reporting standards imposed by your governmental authorities. 

    Founded in 2017, Binance is among the most reliable and popular cryptocurrency exchanges and trading platforms in the world. Apart from allowing users to purchase, exchange and trade, Binance is also meeting the tax needs of its users with the Binance Tax Tool Functionality. You can now have all of your transactions automatically recorded and accounted for.

    This article will answer all the questions you have regarding Binance taxes and Binance tax reporting, that’ll help you stay on top of your crypto taxes!

    Advantages Of Using Binance

    Packed with a lot of advanced features, such as buying, exchanging, and trading a range of cryptocurrencies, Binance also covers one of the most essential aspects of cryptocurrency- tax reporting. 

    You can keep track of your bitcoin activity using the Binance Tax Reporting Tool. You may use the API to produce a report and utilize it to confirm that you are complying with all the tax criteria.

    Here’s how the Binance Tax Reporting tool will benefit you:

    • When seeking your transaction history, safeguard and govern your financial data
    • Get detailed information on capital gains and losses
    • Details of local tax liabilities
    • Integrates with tax reporting software, like ZenLedger, and pulls transaction histories for seamless tax calculation

    Calculation Of Binance Taxes

    Binance supports buying and trading of cryptocurrencies, and both of these are considered taxable events in the United States. A taxable event is an event that has tax implications of some sort.

    Purchasing & Selling Cryptocurrencies

    To calculate taxes, the first step is to determine the capital loss or gain of your purchased and sold cryptocurrencies. The formula for calculating capital gains or losses is:

    Fair market value (FMV) - Cost basis = Capital gains or loss 

    So what exactly is fair market value and cost basis?

    The price at which an item would sell on the open market is known as fair market value (FMV), whereas cost basis is the original price of the asset, as well as any other fees involved.

    An example. Suppose you bought BTC for $6,000 (including fees) in 2019, so your cost basis would be $6,000. Within 2 months of making that transaction, you sold this BTC for $9,000 (including fees) for an equivalent amount of ETH. Now if you subtract your cost basis of $6,000 from the proceeds of $9,000, you’ll get your gains, which in this case is $3,000.

    In the US, your capital gains taxes will depend on your income as well as the holding period of the assets. So, you have to pay short-term capital gains taxes on your gains of $3,000 ($9,000 - $6,000).

    Now suppose, after two years, that is, in 2021, you sold the $9,000 worth of ETH for $15,000 (including fees). Similarly, you’ll have to pay long-term capital gains taxes on your gain of $6,000 ($15,000 - $9,000).

    Trading Cryptocurrencies

    Calculating your trading taxes is not as simple as calculating taxes on purchases and sales of crypto. Let us consider the given data as your trading history:


    Date Trading Activity
    8th March 2021 Bought 2 BNB for $300/td>
    24 March 2021 Bought 2 BNB for $600
    16th June 2021 Bought 1 ETH for $2,500
    29th June 2021 Trade 2 BNB (worth $800 on the spot market that day) for 0.25 ETH

    Since trading is considered a taxable event, you have to figure out your capital gains or losses. The difference between the fair market value ($800) and the cost basis is your capital gain. However, which transaction should we use as the cost basis?

    Accountants compute the cost basis in two different methods:

    • First-in, first-out (FIFO)
    • Last-in, first-out (LIFO) 

    Using FIFO, the cost basis in the given example would be $300. So, the capital gain would be:

    $800 (fair market value) - $300 (cost basis) = $500 (capital gains)

    Using LIFO, the cost basis would be $600. So, the capital gain would be:

    $800 (fair market value) - $600 (cost basis) = $200 (capital gains)

    But this indeed is a complicated process. So the question now is how to get tax info from Binance?

    Binance Taxes: How To Get Tax Info From Binance

    Binance Tax Tool Functionality is available only to Binance users. This tool allows you to generate a record of all your transactions for 1 or more financial years.

    Here is a step by step procedure on how to get your tax info from Binance:

    1. Firstly, click on [Account] - [API Management] after logging into your Binance account.
    2. Now choose [Create Tax Report API].
    3. For your Tax Report, you'll receive a unique API and Secret Key. You can use a ZenLedger to combine your tax report. For this, you have to copy the key.
    4. If you wish to combine your tax report with a tax reporting software (such as ZenLedger), copy the keys.
    5. Choose any crypto tax reporting software. We recommend using ZenLedger, a reliable and secure software that’ll help you report taxes without breaking a sweat.
    6. Click on the [Add Wallet] option under [Wallets] and choose [Binance].
    7. Click on [Setup auto-sync] once you've given your wallet a name.
    8. A Setup Binance API window will appear. Use the Binance Tax Report API's  API keys and Secret Key to log in. Then select the [Secure Import] option from the drop-down menu.
    9. The API keys will retrieve a history of your transactions and maintain your data up to date automatically. Your Binance taxes records will be ready in a few minutes.

    There are a few things that you must take into account here:

    • There is a limit of one Tax Report API per user
    • You must choose the third-party tax reporting platform based on your own or your tax advisor's decisions

    Reporting Binance Taxes

    Now that we’ve dealt with Binance taxes info,  the next relevant question that needs to be answered is: How to pay taxes on Binance?

    For certain transactions in the United States, a 1099-K must be submitted with the Internal Revenue Service. Apart from that, Form 1040, generally known as the US Individual Income Tax Return, should be required.

    A new question- "At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?” is now being added in the tax form of the IRS.

    For this, you’ll have to mention on your tax form that you have traded or received crypto using your Binance account. The Binance taxes document will provide you with additional transaction history information and help you stay on track.

    Using ZenLedger As A Tax Reporting Tool 

    ZenLedger is a popular and reliable crypto tax reporting software. Let’s understand how you can use ZenLedger to calculate taxes.

    Suppose you have the Binance Tax Report API of your Binance tax documents. Simply follow the steps given below:‌‌

    • Login to your ZenLedger account.
    • Click on the [Import] option and choose [Add Account].
    • Choose [Binance] from the list of exchanges given in the exchange section. On the right hand side, you’ll see import instructions (if any) provided by ZenLedger regarding the API that you’ll import.
    • Click on [Next Step] and then tap on [Tax Calculation].

    If you want to verify the file you have imported:‌‌

    • Go to the [Import] tab.
    • Click on [View Imported History].

    In order to calculate the taxes:‌‌

    • Go to the [Taxes] tab and select the corresponding year of taxes you want to calculate from a dropdown menu.
    • Choose the accounting method from the dropdown menu. ZenLedger allows you to choose from the three major accounting methods- FIFO, LIFO, and HIFO. Another great feature of ZenLedger is that it allows you to add a tax professional while you’re calculating taxes on this tab.

    The Bottom Line

    And that’s all you need to know about Binance taxes and Binance tax reporting. Even if you’re just starting off, all this information may feel a little overwhelming, but that’s alright! The good news, however, is that if you get into the habit of keeping track of your operations, you'll be on top of your taxes in no time.


    ZenLedger easily calculates your crypto taxes and also finds opportunities for you to save money and trade smarter. Get started for free now or learn more about our tax professional prepared plans!


    Disclaimer: This material has been prepared for informational purposes only, and is not intended to provide tax, legal or financial advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.

    Binance Taxes And Binance Tax Reporting FAQs

    1. Why should I use the Binance Tax Reporting Tool?

    The Binance Tax Reporting tool will benefit you in the following ways:
  1. When seeking your transaction history, safeguard and govern your financial data
  2. Get detailed information on capital gains and losses
  3. Details of local tax liabilities
  4. Integrates with tax reporting software, like ZenLedger, and pulls transaction histories for seamless tax calculation
  5. 2. How to calculate capital gains tax?

    To calculate taxes, the first step is to determine the capital loss or gain of your purchased and sold cryptocurrencies. The formula for calculating capital gains or losses is:
    Fair market value (FMV) - Cost basis = Capital gains or loss
    So what exactly is fair market value and cost basis?
    The price at which an item would sell on the open market is known as fair market value (FMV), whereas cost basis is the original price of the asset, as well as any other fees involved.

    3. How to get tax info from Binance?

    The Binance Tax Tool Functionality can seamlessly integrate with tax reporting software like ZenLedger using an API key. This will help pull transaction history of a year or more for seamless tax calculation.

    4. How to pay taxes on Binance?

    Binance gives you a detailed report of your crypto transactions that’ll help you file your tax returns to the IRS. A new question- "At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?” is now being added in the tax form of the IRS. For this, you’ll have to mention on your tax form that you have traded or received crypto using your Binance account.


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