It is the duty of every citizen to pay taxes to the government on all income generated from their various businesses. The tax is also extended to revenue generated from the financial markets.
Being a relatively newer aspect of the financial markets, the world of crypto has seen fewer regulations when compared with the stock or forex markets. Nevertheless, more and more governmental authorities are getting interested in introducing more regulations to the crypto world.
As an example, the IRS(the US tax enforcement agency) classifies crypto assets as property and requires traders to report every crypto transaction in their tax returns. Failure to do that will result in stiff penalties being levied against the trader. The same is true of many countries that have gradually enforced crypto regulations.
To be at peace with the authorities, it would be better to learn how to calculate and pay your taxes both in the CeFi and DeFi world. This article will explain how you can pay your taxes on Metamask wallet trades. MetaMask is the leading hot crypto wallet in the world, by market volume and number of users it has.
Since NFTs are all the rage in the last year or so, MM added support for NFTs as well. You can learn how to pay taxes on NFTs, what is considered ordinary income and what is considered as taxable income by clicking here.
WHAT IS METAMASK?
Metamask was created in 2016 by Aaron Davis and ConsenSys. It runs on the Ethereum blockchain and is one of the most popular DeFi wallets. It grants users access to various decentralized applications to interact with different crypto ecosystems in the decentralized world.
It originally started as a browser extension but is now more popular as a wallet compatible with the Android and iOS operating systems. Being a wallet, it is used to store mainly Ethereum, ERC-721, and ERC-20 tokens.
Even though it is hosted on the Ethereum blockchain, which has been criticized for its high fees, the wallet has grown massively due to the DeFi boom this past year. It went from a measly 545,080 users in July 2020 to a gigantic 10,374,279 at the end of August 2021.
HOW TO DO YOUR METAMASK TAXES?
Metamask itself does not have an in-built tax calculator option, nor does it have a button on the website where you can download your entire transaction history in CSV form. However, there are ways to go around that.
It is important to note that you will need a third-party application to help you complete the process of your tax calculation, compilation, and reporting. Those applications will be addressed in due course in this article. For now, let me explain how you can get your transaction history from Metamask (which you will need with those third-party apps).
The process is as follows:
- Since Metamask handles Erc-20 tokens (but also supports other blockchains like BSC, Polygon, Fantom etc), navigate to Etherscan (the blockchain explorer for Ethereum transactions or explorers of other blockchains MM supports) and paste your wallet address in the search column.
- A page comes up that displays all transactions handled on that wallet address. Scroll past those transactions to the bottom of the page.
- Click on ‘Download CSV Export’ and enter the parameters as required.
- Click download, and you’ll get a statement containing all your transactions for the specified period.
This downloaded export will then be used by third-party applications to process your tax reports. This is by far the easiest solution since the tax regulations around cryptos are very complex and figuring out what is a tax liability, what should be taxed as capital gains and what not, how to treat airdrops, staking income etc is just too much work for an ordinary man.
BEST TAX SOFTWARE TO CALCULATE TAXES ON YOUR METAMASK TRANSACTIONS
This is an the best crypto tax calculator that was founded in 2018 by Robin Singh. MetaMask tax reporting with Koinly is a simple process – you just download MetaMask CSV export and import it into the Koinly dashboard.
The platform encapsulates all aspects of your crypto tax life as it monitors all transactions and automatically generates locally and internationally approved tax reports. Besides standard crypto to crypto transactions, Koinly also helps you calculate your tax amount payable from DeFi activities like staking, mining, lending, and airdrops.
The platform provides a comprehensive tax analysis, integrating over six thousand blockchains and over 350 crypto exchanges and 75 wallets. It is also available in more than twenty countries the world over and seeks to increase the number of countries as time goes on.
Koinly has a free plan, with access to its services up to a maximum of 10,000 transactions. Anything above that, you would have to subscribe to its paid plans ranging from 49 dollars to 279 dollars per year.
Lastly, Koinly has a pretty impressive support team consisting of a blog to keep readers informed of updates on the platform. This FAQ section addresses most of the common questions users have about the services on the platform, a live chat section on the website, an email address, and social media support.
Coinledger.io (formerly known as CRYPTOTRADER.TAX)
The tax report so generated is professional and can be provided to tax enforcement agencies. It has integrations with the major exchanges and provides needed education for users on what crypto tax reporting entails and how it concerns them.
Founded in 2017, the Cryptotrader.tax company has its headquarters in the USA with another registered office in Spain. Unlike the Koinly software, Cryptotrader.tax does not have a free plan. However, it has a 14-day money-back guarantee over its four paid plans.
The four plans are the Hobbyist plan, which goes for 49 dollars per year and gives you a tax report for up to 100 trades; the Day trader plan, which goes for 99 dollars per year and gives you tax reports for up to 1,500 trades, the High Volume Trader plan which goes for 199 dollars per year and gives you tax reports for up to 5,000 trades, and the unlimited plan which goes for 299 dollars per year and gives you access to unlimited tax reports.
Zenledger is a tax software created in 2017 that is more popular with DeFi crypto traders as it has specific resources targeted at that niche. It is mainly built for residents of the United States of America and provides tax forms that are locally compliant to the US. Even though crypto traders from other countries can use Zenledger’s services, US traders benefit more.
Zenledger has four plans, including a free plan which allows users to access its services up to 25 transactions in a tax year. Apart from that, it has a starter plan, which goes for 449 dollars and allows up to 100 transactions, a premium plan, which costs 119 dollars and allows up to 5,000 transactions, and an execution plan, which allows unlimited transactions for 399 dollars.
Lastly, Zenledger supports about 40 blockchains and 20 DeFi projects in over 400 exchanges. It also places more emphasis on API integrations to automatically download transaction history from various exchanges.
Cointracking does just that – it tracks your coins. It is a crypto tax software created in 2013 that excels in calculating and exporting your crypto taxes from various exchanges. In addition to that, it has a portfolio tracking feature through which professional crypto traders or holders can track their crypto assets in real-time across all their wallets and exchanges.
Being one of the oldest and richest crypto tax tools, Cointracking can import data from hundreds of exchanges using API and CSV files. It also provides professional help in all the countries it supports and provides a comprehensive chart software for more than 10,000 coins,
With regards to pricing, there are four different plans on the Cointracking platform. They are:
- A free plan which provides access to tax reports for up to 200 transactions
- A pro plan which costs 10.99 dollars and allows the user to access tax reports for up to 3,500 transactions
- An expert plan which ranges from 16.99 dollars for 20,000 transactions to 27.49 dollars for 100,000 transactions.
- An unlimited plan that goes for 54.99 and provides more personalized support.
Coinpanda is a popular crypto tax platform that prides itself on being able to calculate your due tax payments in under 20 minutes. It was launched in 2018 and has since grown to support thousands of cryptocurrencies in over 350 wallets and exchanges.
It has several exciting features, including a capital gains report feature that enables you to calculate and report all your gains(or losses) accurately. It also calculates taxes from various Defi activities like mining, staking, forks, airdrops, etc.
In addition to all these, it has a portfolio tracker which includes some other tools like a search tool that makes you find out information about specific transactions; a tax preview tool that warns you if you’re about to make a costly tax mistake; a tax-loss harvesting tool that finds ways to reduce how much tax you’re liable to pay, among others.
It is the crypto tax software with the broadest range of paid plans. It starts from the free plan, which offers tax reports for 25 transactions, to the Satoshi increased limit plan, which goes for 941 dollars and offers support for 100,000 transactions together with a few extra perks.
Make sure to check out our guides on other tax calculators:
- Cryptotax.io Review
- Binance Tax Calculators
- Best Coinbase Tax Calculator
- CryptoTrader.Tax app review
- Cointracking.info Review
- Bitcoin.Tax vs CoinTracking vs CryptoTrader.Tax
- Cryptotaxcalculator.io Review
- Cryptotax.io Review
- Tax Loss Harvesting
- How to Avoid Paying Taxes on Crypto [BUT DON’T DO IT, JUST PAY THEM]
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CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com