Binance Tax Reporting Guide 2023

Tax reporting lets you monitor and keep track of all crypto activities. The primary purpose of this is to make sure that every trader diligently follows the laws of tax payments set by the regulatory bodies in the respective countries.

To make things easier for their users, Binance has developed the Tax Tool Functionality, which lets you track your transactions and set it up with your accounts, making doing your taxes easier. This feature is yet another thing on the long list of Binance features that have helped make it the #1 cryptocurrency exchange in the world.

Keep in mind though that Binance is not a platform for tax advice. If you need help with your taxes, it is better to consult a personal tax advisor who knows all the rules and regulations regarding your country.

What is the Binance Tax Report?

The Binance tax report consists of all your transactions via your Binance account. There are no Binance tax forms or Binance tax documents. It offers an easy way to export all the transaction data, including the trade history.

Binance has developed an API tool to help users keep track of all tax obligations. This tool helps transfer all the data on various activities such as capital losses, gains, and the entire transaction history from Binance to other third-party apps that can help do crypto taxes.

You can get more than 1 year’s worth of transaction data through this API tool, making doing your taxes far more accessible and easy. For more information about Binance’s API functionalities and other use cases, check out the Binance API guide.

How to Correctly Calculate Your Binance Taxes

There is no specific Binance tax calculator, but you can export your trading data and use the tax reporting tool, along with third-party apps, to accurately do your taxes on crypto trading.

The first thing you need to know is your cost basis. This is the actual value of any asset; in other words, the amount with which you bought the asset. 

It also includes other transactions such as dividends, return of capital distributions, and stock splits. This can vary according to which country you are trading from.

For example, in US-based crypto trading, capital gains tax is highly dependent on tax-filing status, the total taxable income and how long you have had the asset in your ownership.

Once you have this figured out, all you have to do is use this formula:

Fair market value – Cost basis = Capital gain / Loss

If you are a regular trader, ding your taxes can be tedious, which is why Binance came up with the API tool to help make doing taxes easier.

Various Aspects of Tax when it comes to Trading on Binance

When it comes to trading in Binance, you need to know a few aspects of tax; the most important one is differentiating between taxable events for traders and investors. You will have different taxes applicable to you depending on your role on the platform. Some of the most typical crypto activities you can be taxed for are:

Selling crypto for cash:

It will become a taxable event if you sell your cryptocurrency or any other digital asset for cash or fiat currency. It will also be counted as capital gains if you have acquired more than you bought it for. If you are experiencing a capital loss, you can be entitled to reductions in your taxes.

Purchasing items with cryptocurrency:

This also includes buying services, which will incur liability when doing your taxes.

Conversion of cryptocurrencies:

This rule depends from one country to another. In the case of the US, if you convert your cryptocurrency from one to the other, for example, ETH to BTC, it will be recorded as a taxable event.

Crypto salary:

If your job offers you pay in the form of cryptocurrencies, it will be regarded as your income and taxed accordingly.

Staking or mining cryptocurrencies:

Whatever amount of cryptocurrency you receive from mining (be it with the Binance Pool or any other pool) or staking (on Binance Staking, staking locally, or staking with another service provider) will be taxable. If you are mining for business, it will be regarded as a business operation and taxed accordingly.

Tax authorities generally regard cryptocurrency as an asset and not actual currency. If your country does not have strict cryptocurrency laws, you will probably be taxed according to how your other taxes are filed.

How to Get Tax Info From Binance

If you want to start filing your taxes by generating all your transactions and statement for more than one year, you can use the Tax Tool Functionality API to file taxes automatically.

  1. Launch the Binance platform
  2. Log into your Binance account
  3. Click on “Account
  4. Go to “API Management
  5. Tap on “Create Tax Report API
  6. You will get a secret key and a unique API for your Tax Report
  7. After this, you may copy the keys for integration on any third-party platform for tax purposes.
Binance Tax reporting Create API

Binance Taxes FAQ

How to know the value of Bitcoin sold on Binance for tax purposes?

The value of Bitcoin is determined by demand and supply in the market. If the demand for Bitcoin increases, even the value increases. When it comes to supply, the value determining factor for Bitcoin is unique, and it is unaffected by fluctuations in demand.

Why does Binance only keep 3 months of tax data?

Before, Binance only did not have the tax reporting tool for crypto tax reporting. If you needed your transaction data, you had to export the data manually for three months at a time. With this new API Tax Reporting tool, you can export 1 year’s worth of data on trading and transactions.

How do you report tax gain on crypto trades?

For crypto trades, if you make gains and have more frequent trading activities, it will come under “business income.” This gain will be reported to the tax authorities as Capital Gain, and tax authorities regard all cryptocurrencies as assets.

Does Binance report to IRS and other tax authorities?

No, Binance does not report to the IRS since it is non-operational in the US. After recent speculations on the legitimacy of Binance is required to do KYC and AML verification, which means that it has to report all its user information to the government.

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