Reporting Requirements
What you need to track and report for tax and regulatory compliance
Why Record-Keeping Matters
The burden of proof for tax compliance falls on you. If tax authorities question your returns, you need records to support your positions. "I don't remember" or "I lost the records" isn't an acceptable answer.
Good record-keeping also makes your life easier. Trying to reconstruct years of trading history during tax season is painful and error-prone.
What to Track
Purchases: Date, amount of crypto acquired, price paid (including fees), source/exchange.
Sales and trades: Date, amount disposed, proceeds received, cost basis of coins sold, gain/loss calculation.
Income: Date received, fair market value at receipt, source (mining, staking, airdrops, payment for services).
Transfers: While wallet-to-wallet transfers aren't taxable, track them to maintain chain of custody and prove you still own the coins.
Tools and Methods
Exchange reports: Most exchanges provide transaction history downloads. Export these regularly—accounts can be closed or data retention policies can change.
Crypto tax software: Services like Koinly, CoinTracker, and TaxBit can import from exchanges and wallets, track cost basis, and generate tax reports. Worth the cost for active traders.
Spreadsheets: Manual tracking is possible for simple portfolios but becomes unwieldy quickly. If using spreadsheets, be meticulous about formulas and data entry.
Blockchain explorers: Public blockchains provide permanent transaction records. While not a replacement for your own records, they can help reconstruct history if needed.
Reporting to Tax Authorities
Requirements vary by jurisdiction, but common elements include:
Capital gains reporting: Typically reported on specific tax forms listing each disposal, cost basis, proceeds, and gain/loss.
Income reporting: Mining, staking, and other crypto income usually reported alongside other income.
Foreign account reporting: Some jurisdictions require disclosure of crypto held on foreign exchanges above certain thresholds.
Exchange reporting: Many exchanges now report directly to tax authorities, so your reports need to match what they report.
Benefits of Good Record-Keeping
- Accurate tax filing that can withstand audit scrutiny
- Ability to identify tax-loss harvesting opportunities
- Clear picture of your actual portfolio performance
- Evidence of cost basis if questioned by authorities
Record-Keeping Pitfalls
- •Relying solely on exchanges—accounts can be closed, data lost
- •Not recording DeFi transactions that happen off exchanges
- •Mixing personal and business crypto without clear separation
- •Waiting until tax season to organize—details get lost
Key Takeaways
- Track every transaction: date, amount, value, fees, parties involved
- Export exchange data regularly—don't rely on it being available later
- Consider crypto tax software if you have significant activity
- Reporting requirements vary by jurisdiction—know your local rules
- Good records protect you in audits and help optimize tax strategies