Resources/Integrations/How To Do Your Binance US Taxes

How To Do Your Binance US Taxes

Last Updated: 9 days ago

Key takeaways

Your Binance transactions may be subject to capital gains and income taxes, and it’s important to report them on your tax return.
Binance allows you to download your transaction data to help you file your taxes, and in some cases, you may receive a 1099 form.
Crypto Tax Calculator makes it easy to import your transaction data and calculate your crypto tax liability.

If you’ve invested using Binance within the past year, you’ll have to report and pay taxes on your transactions when you file your income tax return. Because each crypto platform is different, it’s important to understand exactly how to access your tax information in Binance and how to report it to the IRS. In this Binance tax guide, you’ll learn:

How your Binance transactions are taxed
How to do your Binance taxes with Crypto Tax Calculator
How to get your Binance tax documents
Whether Binance reports your transactions to the IRS

Save yourself the headache and get a crypto tax report in just a few clicks.

How is Binance taxed?

Just like your other income and investments, your Binance transactions may be taxable. While the IRS hasn’t issued specific guidance on every type of crypto or DeFi transaction, most have some tax implications, and it’s important to know what they are when filing your tax return.

Generally speaking, your crypto transactions will be subject to either capital gains or income taxes. Capital gains taxes apply on transactions where you sell or dispose of crypto for more than your cost basis. Income taxes apply when you receive crypto as payment, a reward, or for some other reason.

The table below breaks down the tax implications of some of the most common Binance transactions.

Transaction type	Tax treatment
Selling crypto	Capital gains taxes on the difference between your cost basis and sale price
Crypto-to-crypto swaps	Capital gains taxes on the difference between your cost basis and value at the time of the swap
Staking crypto	Income taxes on the value of your staking rewards
Lending and borrowing crypto	No tax implications for borrowing crypto For lending, income taxes on your interest income
Margin trading crypto	Capital gains taxes on the difference between your cost basis and sale price Capital gains taxes on the sale of any crypto as a result of a forced liquidation of your account
Copy-trading crypto	Capital gains taxes on the difference between your cost basis and sale price

How selling crypto is taxed on Binance

Selling crypto is one of the most common taxable transactions on Binance. When you sell crypto on Binance (or anywhere else), you’ll pay capital gains taxes on the difference between your cost basis and the amount you sell it for. Your cost basis is usually the amount you purchased the asset for, minus your trading fees.

Capital gains are classified as either short-term or long-term gains. Short-term gains, meaning those on assets you held for one year or less, are subject to ordinary income taxes. Long-term gains, meaning those on assets you held for more than one year, are eligible for more favorable tax rates or 0%, 15%, or 20%, depending on your taxable income.

How crypto-to-crypto swaps are taxed on Binance

A crypto-to-crypto swap is when you literally swap one cryptocurrency for another. In the eyes of the IRS, you’re disposing of the first cryptocurrency and acquiring a new one. First, you’ll pay capital gains on the coin you’re disposing of. Meanwhile, your cost basis in the newly-acquired coin is its value when you receive it.

How staking crypto is taxed on Binance

Staking involves locking up some of your crypto in exchange for rewards. It’s similar to the interest you’d earn by placing your money in a savings account or certificate of deposit. You’ll pay ordinary income taxes on any staking rewards based on their value when you receive them. And if you eventually sell your staking rewards, you’ll pay capital gains taxes on any earnings.

How lending and borrowing is taxed on Binance

You can usually borrow crypto without any tax implications (and you may even get a tax break on your interest when you repay it, though only in very specific situations). Lending crypto, on the other hand, can result in tax liabilities. Any interest you receive on the loan is considered taxable income, similar to your staking rewards.

How margin trading is taxed on Binance

Margin trading allows you to purchase crypto with borrowed funds. You won’t pay taxes on the money you borrow, but you will pay capital gains taxes on your earnings, just as you would on any crypto you bought and sold with your own money.

Additionally, if there’s any forced liquidation, which sometimes happens if the value of your margin account falls below a certain level, pay taxes on any gains on those assets.

How copy-trading crypto is taxed on Binance

Copy trading is a feature that Binance and other platforms offer that allows you to replicate other investors’ crypto trades. It allows beginner traders to benefit from the expertise of more successful traders.

In terms of tax implications, the IRS doesn’t distinguish between gains from copy trading or your own trades. If you sell assets for more than your cost basis, you’ll pay capital gains taxes on your profits, regardless of whether the sale was the result of copy trading.

How to calculate taxes for Binance

The best approach to calculating your Binance taxes depends on how much effort you want to put in. The simplest way to calculate them is to use a software like Crypto Tax Calculator, which imports all of your transaction data and helps you calculate your tax liability. This approach is especially ideal if you have any complex transactions or many trades throughout the year.

If you’d prefer a DIY approach, you can simply calculate your gain on each individual transaction by subtracting your cost basis from the price you sold your crypto for. This method may work if you’re well-versed in taxes or have very simple transactions, but it’s important to double-check your work to avoid errors.

The best crypto tax software for Binance – Crypto Tax Calculator

Using crypto tax software can simplify the process of calculating, reporting, and paying your crypto taxes.

Crypto Tax Calculator makes it easy to connect your Binance account, import all of your transactions, and get your annual tax report.

It will help you ensure the accuracy of your tax information while also minimizing the amount you’ll have to pay. It’s a fully automated process, meaning it eliminates any burden from you.

How to do your Binance tax with Crypto Tax Calculator

Crypto Tax Calculator allows you to calculate your taxes arising from any trading activity on Binance US.

You can import your trading data using API keys. You can then easily calculate your financial year's short and long-term gains using various in-app inventory methods.

Import via API keys

Sign in to your BinanceUS account
On the top right of the navbar hover over the 'Profile' icon and click on 'API Management' from the dropdown (https://www.binance.com/en/my/settings/api-management)
Enter the label for a new API as 'Crypto Tax Calculator' and click on ‘Create API’ (yellow button)
You may have to enter some verification information
Once created, copy the 'API Key' and 'Secret Key'
Click Edit restrictions and uncheck 'Enable Spot Trading'. Also, be sure that 'Enable Withdrawals' is unchecked
Double check that 'Can Read' is the only option checked!
Leave the IP access restriction selection as 'Unrestricted'
Paste the copied 'API Key' and 'Secret Key' here into Crypto Tax Calculator and click 'Add API'. Syncing may take about 20 minutes due to restrictions on BinanceUS's side

Using CSV

Using the API option, you can upload your transactions from BinanceUS to calculate your taxes using Crypto Tax Calculator.

If you find that you are missing some transactions, you can upload these manually using our Simple or Advanced manual CSV import.

How to get Binance tax documents

Binance will only issue you a 1099 tax form if you earned at least $600 throughout the tax year. Here’s how to get your tax form:

Log into your Binance account.
Open your Binance profile.
Scroll to the “Account” section and select “Reports.”
Select “Tax Reports.”
Choose the tax form you want to download.

If you don’t qualify to receive a 1099 form from Binance, you can still download your tax information. Binance allows you to create custom tax reports based on the information you need. You can use these reports when calculating and reporting your crypto taxes.

Are Binance transactions taxable?

Generally speaking, your Binance transactions are taxable if they result in any income or gains. This is frequently the case when you sell crypto or participate in swaps, staking, and other DeFi transactions.

The tax implications of your Binance transactions vary depending on the type of transaction and the value. For example, while selling cryptocurrency frequently results in capital gains, it could also result in a capital loss, which would actually lower your tax liability for the year.

Another factor that impacts your Binance taxes is your household taxable income. Because your income and capital gains tax rates are based on your income, you can expect to pay more for your crypto transactions if you have a higher income.

If you’re ever unsure about whether your transactions are taxable, it’s important to get an outside opinion. You can speak with a tax professional or use a tax software like Crypto Tax Calculator to get the answers you need.

Does Binance report to the IRS?

Crypto platforms are typically required to report crypto transactions to the IRS when a taxpayer exceeds certain earnings thresholds. When Binance issues you a 1099 form, it also sends a copy to the IRS, so you can rest assured the IRS knows about those transactions.

However, you’re required to report and pay taxes on your crypto transactions even if you don’t receive a 1099. There are sizable penalties for failing to report your income to the IRS, so it’s best to assume they know about all transactions.

Sources

The information provided on this website is general in nature and is not tax, accounting or legal advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and seek professional advice. Cryptotaxcalculator disclaims all and any guarantees, undertakings and warranties, expressed or implied, and is not liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or Consequential Loss or damage) arising out of, or in connection with, any use or reliance on the information or advice in this website. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied. The information in this website is no substitute for specialist advice.