How to handle crypto taxes

What you need in advance

Before you start counting, gather in one place:

• access to your accounts on every exchange and exchange office you have used, including ones you have not logged into for a long time;
• the addresses of your wallets, which let you find your whole history in a block explorer (a website where any transfer can be seen); the article what is a blockchain explains why these records are public;
• records of where your crypto came from, whether a purchase, a payment from a client, a gift or a reward;
• bank statements showing deposits to exchanges and withdrawals of money;
• the address of your country's official tax authority website.

How to handle crypto taxes step by step

Step 1. List all your crypto transactions

Start with a list of what you have done with crypto. You may have bought it for money, held it, moved it between your own wallets, sold it, swapped one crypto for another, used it to pay for goods or received it for work. The list also covers rewards for mining or staking, that is, for taking part in checking a network's transfers, plus gifts and airdrops, which are free giveaways of tokens. Put in the transactions that you think carry no tax as well. The tax authority judges a transaction by its own rules, and a forgotten purchase will later stop you from working out the gain on a sale.

Step 2. Mark the transactions that usually create a taxable event

A taxable event taxable event is a transaction after which you may owe tax or have to report. Think of something you bought at a market. While it sits at home, you have neither earned nor lost anything on it, however much its price goes up. The result appears at the moment you sell it or swap it for something else.

Tax usually arises when you sell crypto, pay with it or swap it, even for another crypto. Only a few countries exempt the swap of one crypto for another from tax¹ ⚖️. In the United States, for example, both such a swap and paying for a service in crypto are taxed³ ⚖️. So remember what you paid: the gain is what you got from the sale minus the purchase price and fees³. How to sell crypto and withdraw the money is covered in a separate guide.

Income is crypto you received for work or as a reward. It is usually valued at what the crypto was worth when you received it, even if you never sold it³ ⚖️. Tax authorities tax mining income too¹ ⚖️. How a freelancer can accept payment and what to record for each payment is described in the freelancer payment scenario.

A rise in price while the crypto sits with you is usually not subject to income tax; that is the case, for example, for individuals in Argentina⁴ ⚖️. A transfer between your own wallets, or from an exchange to your own wallet, does not change the owner, so it usually creates no tax³ ⚖️.

A taxable event does not yet mean tax is due. A sale may have brought a loss, and some countries have exemptions and thresholds for small amounts.

Step 3. Gather your transaction history

For each transaction, write down:

• the date and time;
• the type of transaction (purchase, sale, swap, transfer to yourself, income received);
• which crypto and how much;
• what it was worth in your local currency at the time;
• the fee;
• the exchange or wallet address, and the transaction hash, that is, the transfer's number on the network.

The US tax authority, for example, asks people to keep roughly this set: when each unit of crypto was received and sold, what it was worth at those moments and what you got in return³. The easiest way to get an exchange's history is to download it as a file from your account.

Which exchange rate to use for converting into local currency is decided by your country's tax authority.

Step 4. Find your country's rules

The reference has pages about countries, each with a section on taxes, for example cryptocurrency in Argentina, cryptocurrency in Brazil and cryptocurrency in Kazakhstan. For other countries there is one source of rules: the official tax authority website. Advice from a forum or a chat is not a source.

On the tax authority website, look for answers to six questions:

• which crypto transactions are taxed in your country;
• how the gain is calculated when you bought at different prices;
• whether there are exemptions and thresholds;
• whether you must declare the crypto itself and accounts on foreign exchanges;
• by what deadline and in what form the return is filed;
• what rate converts crypto into local currency for tax purposes.

Step 5. Decide whether to file yourself or with a tax adviser

With only a few transactions and a complete history, you can usually file the return yourself following the tax authority's instructions. A tax adviser who understands crypto makes complex cases easier: many trades, income and sales in the same year, staking, airdrops or DeFi (financial services that run as programs on a blockchain), transactions in several countries, or a move abroad. Bring your transaction history to the meeting, along with the answers you found there in step 4.

Will the tax authority find out about your crypto transactions

Crypto is not anonymous to the tax authority. Transfers are recorded on a public blockchain, and exchanges check their customers' identity, so a wallet address can be linked to a person. Countries have also agreed to exchange this information. Just as an employer reports paid wages to the tax authority, crypto services under the international CARF standard CARF pass it data on their customers' transactions, and the tax authority shares it with tax authorities in other countries. Whether your country is among them, check in the current list.

How to avoid scammers demanding crypto "tax"

Scammers pose as government agencies, demand payment in crypto and rush you so that you have no time to check². Hence the main rule: do not hurry. Check any demand to pay "tax" against the tax authority's own website, which you opened yourself rather than through a link in a message. How such scams work is covered in the article phishing and scams.

Frequently asked questions

More detail on the international exchange of tax data

The CARF standard (Crypto-Asset Reporting Framework) was developed by the Organisation for Economic Co-operation and Development (OECD), and according to its list, Brazil and Kazakhstan have committed to start this exchange in 2027⁶ ⚖️.