How to Do Your BlockFi Taxes?
BlockFi is a holistic cryptocurrency exchange that offers crypto trading, crypto wallet, crypto rewards credit card, and crypto-backed loans. It is a complete ecosystem for advanced traders who use the platform for its wide range of products. Apart from this, the company also offers low-interest loans and an interest-bearing account with up to 8 percent APY.
Headquartered in Jersey City, NJ, BlockFi challenges the status quo of traditional banks and remains and expands access to banking resources. Since its founding in 2017, the company has 1 million verified users, over $10 billion in assets, and over 800 employees. But, what is it like to trade on the platform? What works for and against it? How BlockFi taxes work? Let’s find out.
Connecting your BlockFi Address to ZenLedger For Your BlockFi Tax Report
Within ZenLedger, on the Import Transactions page and Exchanges tab, select the Exchange you want to import. Then you'll see a table that outlines the possible methods. For many centralized exchanges, we support a direct API code import, while others may require a CSV import. Decentralized exchanges may require a wallet address.
To import your transactions from an exchange, simply navigate to the "Exchanges" tab of the "Imports" page. Select the exchange that you are looking to import, and instructions will be provided for that specific exchange!
Pros and Cons of BlockFi
BlockFi serves individuals and businesses on a global scale, especially for advanced crypto traders as it is a one-stop shop for their crypto needs, but like every other exchange, it has some pros as well as cons.
- Holistic platform: The exchange offers a centralized dashboard for users to manage their crypto tokens, credit card expenditure using the BlockFi credit card, the out a loan, and more.
- Help center: It has some of the most exhaustive tutorials on how to use the exchange and some unique use cases.
- Earn interest on crypto: By holding digital assets in the exchange’s interest account, investors can earn up to 8 percent interest.
- Not beginner-friendly: Beginners might get confused with the user interface.
- No video explainers: Even though the tutorials are exhaustive, they are not in the video format for easy understanding.
- Limited number of cryptocurrencies: The exchange has only 13 digital assets.
BlockFi can be accessed either via a web browser or mobile apps for iOS and Android. All in all, the platform is simple and intuitive for intermediate to experienced traders.
On the web browser, the users have to go to the top of their screens to search for the assets they want to trade. For BlockFi Interest Account, users can configure recurring trades from daily to weekly to even bi-weekly.
BlockFi’s fee structure is different from its counterparts, which charge simple maker or taker fees. On one hand, BlockFi doesn’t charge a trading fee and on the other has withdrawal limits and charges withdrawal fees. Similarly, for some assets, you get one free withdrawal a month while for others you are charged a fee every time you withdraw. This makes calculating BlockFi taxes quite challenging.
BlockFi prevents fraudulent activity on the platform by using various security measures. Users have to verify their identity while registering on the platform by providing a government-issued photo ID and some basic personal information. Users also have the option to activate two-factor authentication for an added layer of security.
Additionally, BlockFi contains its funds in cold storage which is not connected to the internet, making the platform extra secure.
Opening Up a BlockFi Account
To open an account on BlockFi is a simple process. The exchange asks for your personal information including your full legal name, address, email address, and country of residence. Further, if you want to trade on the platform, you’ll have to finish the KYC process by providing your government-issued ID.
Reporting taxes can be a daunting task, especially for a crypto investor. Luckily, BLockFi provides its users with support and services to make tax reporting easier for its US taxpayers.
For US taxpayers, BlockFi provides two separate reports associated with the BlockFi Interest Account (BIA) and any other trading activity performed throughout the year. As per the IRS, any earnings from cryptocurrencies are considered a taxable event. This means that if you earn interest on your crypto assets, it is considered as payments of property. This income has to be reported through the 1099-MISC. It is important to note that US taxpayers who earned over $600 of interest will receive the 1099-MISC. Also, US taxpayers who traded during the financial year will receive 1099-B.
International clients have to look at their transaction history and monthly interest statements to file BlockFi taxes. If these clients are using tax preparation software, they have to enter the 1099 income they might have earned.
How to Access Tax Forms?
Follow these steps to download your tax forms for your BlockFi tax reports:
- First, sign in to your BlockFi account on a web browser (Mobile apps don’t have reports)
- Click on the profile icon
- Choose “Reports”
- On the “Reports” page, click on the “Taxes” section
- Choose “2021” as the tax year
BlockFi is one of the most complete crypto platforms, but the traders/investors need some experience to maneuver through it. The security is among one of the best, the trading experiences are smooth, interest rates are good, and even helps its users in calculating BlockFi taxes. However, the fee schedule is a bit unpredictable and it has a limited number of digital assets.