How to do your OpenSea taxes with Koinly

What is OpenSea?

OpenSea is the largest web3 marketplace for NFTs and other crypto collectibles. The platform lets investors create, buy, sell, and trade NFTs and other crypto assets. With more than $35 billion in trading volume since the platform launched in 2020, Opensea remains one of the most popular platforms for NFT investors and supports multiple blockchains including Ethereum, BNB Chain, Solana, and more.

Opensea valuation

In January 2022, Opensea announced a $13.3 billion valuation, following a $300 million Series C round.

How are OpenSea NFTs taxed?

Taxes on NFTs may vary depending on where you live in the world, so make sure to read our crypto tax guides for more information in your country, this said, generally speaking, NFTs are viewed as a kind of crypto asset and taxed as such. This means you may pay Capital Gains Tax or Income Tax on your NFTs depending on the transactions you've made:

• Buying an NFT: Buying an NFT with fiat currency would be tax free, but in most instances, you'll actually be buying your NFT with crypto - like ETH or SOL. This is generally viewed as a crypto to crypto trade and any gain from disposing of your crypto for your NFT would be subject to Capital Gains Tax.
• Trading NFTs: Trading one NFT for another would generally be viewed as a crypto to crypto trade and any gain subject to Capital Gains Tax.
• Selling an NFT: Generally speaking, if you've bought an NFT you later go on to sell, you'll pay Capital Gains Tax on any gain as a result of the sale. However, if you're creating and selling NFTs - like an artist with a paintbrush - this could potentially be seen as a kind of additional income and therefore subject to Income Tax instead.

An important note for US investors though - the IRS has just updated their NFT guidance to state that NFTs, where the underlying asset is deemed to be a collectible (including works of art), may be taxed as collectibles. Long-term gains from collectibles are still subject to Capital Gains Tax, but at a higher rate than for other assets.

Got NFT losses? Learn how to use them to reduce your tax bill with NFT tax loss harvesting.

Does OpenSea report to the IRS?

It's unlikely OpenSea has reported to the IRS. Users use non-custodial wallets to interact with OpenSea and there's no mandatory KYC on the platform, so there's very little identifying data that OpenSea may be able to share with IRS. However, the OpenSea privacy policy does state the company reserves the right to share user data to remain compliant with relevant authorities, and the new crypto business reporting requirements from the US Infrastructure Bill are imminent, meaning OpenSea may have to report to the IRS in the future.

How to get OpenSea tax documents

Wondering why OpenSea can't just generate tax documents for you? OpenSea tax reporting is complicated.

Crypto taxes - including NFT taxes - are incredibly convoluted. For platforms with millions of users spread across the world, the tax rules vary from country to country. As well as this, OpenSea doesn't have your other crypto transaction records to make calculations with. So for example, if you bought an NFT on OpenSea with Ethereum, OpenSea doesn't know your original ETH purchase price and therefore can't calculate any gains.

That's where Koinly comes in. Koinly makes generating your OpenSea tax documents easy. All you need to do is connect to Koinly and Koinly will calculate your gains, losses, and income for you and generate your OpenSea tax forms. Here's how it works.

How to import OpenSea transactions to Koinly automatically

To import your OpenSea transactions into Koinly so it can calculate your taxes, you'll need to connect each wallet you've used to interact with OpenSea to Koinly.

This is really easy to do, you just need your public address from each wallet - but remember, you’ll need to do this for each wallet you use to interact with OpenSea in order for Koinly to correctly identify your cost basis, transfers, sales, swaps, 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 wallet

1. Open or log in to your wallet
2. Select the blockchain you’d like to connect to - for example, Ethereum or Binance Smart Chain
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 - for example, Ethereum or Binance Smart Chain
3. Give your wallet a name - for example - MetaMask or Trust Wallet
4. Paste your public address
5. Select import

How do I troubleshoot my OpenSea integration to Koinly?

We’ve got plenty of help at hand if you’re having any trouble connecting OpenSea to Koinly:

• 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

How does OpenSea work?

Wondering how to use OpenSea? OpenSea is a peer-to-peer NFT marketplace and the largest of its kind. You interact directly with other sellers to buy, sell or trade NFTs using non-custodial wallets, meaning you retain complete control of your NFT and crypto at every step. To use OpenSea, you'll need to have a compatible non-custodial wallet. Some of the most popular supported wallets include:

• MetaMask
• Ledger
• Coinbase Wallet
• Phantom
• Trust Wallet
• Solflare

As well as this, users can connect a number of other popular crypto wallets using WalletConnect. The right wallet to choose depends on the blockchain you're interested in buying or selling NFTs on. OpenSea supports many blockchains, including:

• Arbitrum
• Avalanche
• BNB Chain
• Ethereum
• Optimism
• Polygon
• Solana

Once you have your wallet, you're good to go! Let's look at how to use OpenSea for a variety of common transactions.

How to buy an NFT on OpenSea?

It's easy to buy an NFT on OpenSea, just follow these instructions:

1. Go to the item page for the NFT you want to buy and select add to cart. You can do this for multiple NFTs from the same chain, or add multiple NFTs of the same kind for semi-fungible ERC-1155 NFTs.
2. Once you're ready to checkout, select the cart icon.
3. Select complete purchase.
4. Follow the prompts in your wallet to confirm the transaction.

If you're looking at bidding on an NFT instead of buying a fixed price NFT, the steps are a little different:

1. Go to the item page for the NFT you want to bid on and select make offer.
2. Select the currency you want to make your offer in.
3. Select the amount you'd like to bid.
4. Select make offer.
5. Confirm the transaction in your wallet.
6. You'll be able to see a list of all active offers in your OpenSea profile under the offers made tab.

How to sell an NFT on OpenSea?

It's easy to sell an NFT on OpenSea. Just follow these instructions:

1. On OpenSea, select your profile icon.
2. Select the NFT you'd like to sell from your wallet.
3. On the item page, select sell.
4. Choose the type of sale and price. If you select a fixed price sale, you'll pick the price. In a timed auction sale, you can choose to sell to the highest bidder or sell with a declining price. You can set a reserve price for either.
5. Select the time period your sale will last.
6. Confirm your listing by signing the transaction.

How to mint an NFT on OpenSea?

Wondering how to create an NFT on OpenSea or upload an NFT to sell on OpenSea? Here's how:

1. To start, you'll need to create a collection, so select your profile icon and then my collections.
2. Select create.
3. Upload your NFT, and fill out any other descriptive details you want to including a name, description, and external link.
4. Under collection, you can choose to add the NFT to an existing collection and add features like properties, levels, stats, and unlockable content.
5. Select save.
6. Under supply, enter the number of items that can be minted.
7. Select the blockchain.
8. Select create.

You can then sell your newly minted NFTs on OpenSea by following the steps above.