How to file your Rocket Pool (RPL) taxes with Koinly

How to do your Rocket Pool (RPL) taxes with Koinly 

Rocket Pool is a decentralized Ethereum liquid staking protocol, that helps investors earn staking rewards while maintaining liquidity through liquid staking tokens (rETH) or with a lower minimum ETH deposit, and earn RPL rewards. But your Rocket Pool transactions come with tax implications. Whatever your investments, Koinly can help you calculate taxes for 400,000+ ERC-20 tokens including RPL, and rETH tokens. Here's how.

1. Sign up to Koinly and choose your country and currency
2. Connect Ethereum with Koinly to import all your trades safely and securely - including ERC-20 tokens like RPL
3. Koinly identifies the cost basis of your tokens and coins, as well as your taxable transactions
4. Koinly calculates any capital gains, losses, and income from your taxable transactions
5. Koinly generates your crypto tax report - ready to help you file with your tax office, or hand it over to your accountant.

How are Rocket Pool transactions taxed?

The tax you pay on crypto - including RPL and rETH - all depends on where you live and your tax office's guidance on it, so read our crypto tax guides for specific information. However, broadly speaking, two taxes may apply to your RPL transactions:

• Capital Gains Tax:  When you sell or trade RPL tokens, you’ll usually pay Capital Gains Tax on any gain you make as a result of the transaction. There may also be additional tax implications for your rETH tokens.
• Income Tax: When you earn new RPL tokens through staking, this could be seen as additional income and you may need to pay Income Tax based on the fair market value of your RPL tokens in your fiat currency at the time you received them.

As well as this, your rETH tokens have tax implications. Frustratingly, most tax offices haven't released specific guidance on DeFi transactions, so you (or preferably your accountant) will need to interpret the current guidance as it applies to your Rocket Pool staking transactions. Again, this varies so check your country's guidance. But generally speaking, your rETH tokens will be subject to Capital Gains Tax.

This is because when you add ETH to the protocol (unless you're running a node as well), you'll receive rETH - a token representing your staking deposit, the value of which increases relative to the rewards earned. You don't earn new tokens as your Rocket Pool staking rewards, instead, you'll only realize your staking rewards gain once you trade your rETH back for your original ETH deposit. As such, adding and removing ETH from Rocket Pool may be viewed as a crypto-to-crypto trade from a tax perspective and you may need to realize a capital gain or loss both when you deposit your ETH and when you trade your rETH tokens back.

Can the IRS track RPL?

The IRS, and other tax offices, have highlighted crypto as a key focus this tax season, and your Rocket Pool investments will be no exception. But can the IRS track crypto?

Your Rocket Pool transactions are all recorded on the Ethereum public ledger... and a public ledger is just that - public. Anyone can search for a given address to look at the transactions made - including the IRS. If the IRS can link your identity to a given wallet or transaction - then they may know about your investments, even if you’ve used decentralized protocols like Rocket Pool and non-custodial wallets.

As always, we recommend reporting your crypto accurately to the IRS to avoid audits or crypto tax penalties.

How to get Rocket Pool (RPL) tax documents

The tax documents you'll need all depend on where you live and your tax office, but broadly speaking, you'll need to report your gains, losses, or income from crypto to your tax office in your annual tax return.

To do this for your RPL tokens, you'll need to identify each taxable transaction involving RPL tokens, and the kind of tax that applies. So you'll need to calculate a capital gain or loss for every time you sold or swapped RPL tokens, as well as calculate the fair market value in your fiat currency for any RPL tokens viewed as additional income, like earning new RPL as a staking reward.

If you think that sounds time-consuming, you’d be right - which is why most investors use a Rocket Pool tax calculator like Koinly. Koinly can calculate your gains, losses, and income for more than 450,000 ERC-20 tokens - including RPL!

Of course, when we talk about Rocket Pool taxes, many investors will be wondering whether Koinly can help them calculate their other transactions relating to the Rocket Pool protocol, not just RPL tokens, and the answer is yes! Koinly can help you track and calculate any gains or losses from rETH transactions too. You just need to connect your blockchain to Koinly to do so using your public address. Here's how it works.

How to import Rocket Pool transactions to Koinly automatically

To import your Rocket Pool transactions into Koinly, you’ll need to connect each Ethereum wallet you use to Koinly.

This is really easy to do, you just need your public address - but remember, you’ll need to do this for each Ethereum wallet you use to interact with Rocket Pool in order for Koinly to correctly identify your cost basis, transfers, sales, swaps, liquidity pool transactions and more.

You can find steps on how to connect a variety of popular wallets to Koinly on our integration pages, but here’s an example of how it generally works.

In your wallet

1. Open or log in to your wallet
2. Select the blockchain you'd like to connect to Koinly - in this example, Ethereum
3. Copy your public address

On Koinly

1. Sign up or log in to your Koinly account and go to the wallets page
2. Search for and select the blockchain you'd like to connect to - in this example, Ethereum
3. Give your wallet a name - for example - MetaMask Ethereum
4. Paste your public address

How do I troubleshoot my integration to Koinly?

Problems connecting to Koinly? No worries - there's help at hand:

• Head over to our help center
• Hit up our discussion boards - we might have already answered your question
• Ask us on social media - we're on Twitter or Reddit
• Contact us by email or live chat
• Got a feature request? Give us feedback on Canny