Stuck on Ethereum Tax? Wherever you live - your tax office wants to know about your crypto investments - including your ETH. Here’s everything you need to know about Ethereum taxes.
Do you pay tax on Ethereum?
Yes. All cryptocurrencies - including Ethereum - are subject to tax. The exact tax you’ll pay depends on where you live and the specific transactions you’re making. You can learn more about ETH and crypto tax in your country in our crypto country tax guides.
However, generally speaking - you’ll pay either Capital Gains Tax or Income Tax on your ETH.
You’ll pay Capital Gains Tax on any profit you make when you dispose of ETH. This includes:
- Selling ETH for fiat currency - like USD.
- Trading ETH for another cryptocurrency - including ERC20 tokens.
- Spending ETH on goods or services.
- Gifting ETH - depending on where you live.
Meanwhile, you’ll pay Income Tax on ETH when you’re seen to be earning ETH. This includes activities like mining or staking ETH. In these instances, you’ll pay Income Tax based on the fair market value of ETH at the time you receive it.
Even gas fees may be subject to tax, although at times may be tax deductible. We won’t get into it now - but you can learn more in our gas fees guide.
How to prepare Ethereum taxes
Now you know the basics on Ethereum tax - you need to know how to calculate and file your ETH taxes. Wherever you live, your tax office wants to know about each taxable ETH transaction you’ve made, the subsequent capital gain or loss, as well as about any ETH income you’ve made.
So what do you need to do to prepare your ETH taxes? Follow a few simple steps.
- Get your complete Ethereum transaction history.
- Calculate your ETH taxes - either yourself or with a crypto tax calculator.
- File your ETH and crypto taxes as part of your annual tax return with your tax office.
- Relax - you’re done for another year!
Let’s start with how to get your Ethereum transaction history.
How to download & export Ethereum trading & transaction history
There’s a couple of ways to get your Ethereum transaction history depending on whether you’re doing your ETH taxes yourself or using a crypto tax app. Let’s look at both.
- Use the Ethereum API with crypto tax software. You can use the public address of the ETH wallet(s) you use to automatically fetch your Ethereum transaction history. Your crypto tax calculator will then identify your cost basis, taxable transactions, capital gains, capital losses and any crypto income for you. Done!
- Export your Ethereum transaction history in a CSV file. Some ETH wallets let you download a CSV file of your transaction history. If not, you can use a blockchain explorer like Etherscan to get a CSV file of your ETH transaction history. You can then use this CSV file to calculate your crypto taxes yourself, or upload your CSV file(s) to a crypto tax calculator.
Do Ethereum wallets provide a tax report?
No. The vast majority of ETH wallets will not provide a tax report. However, if you’re trading ETH on large crypto exchanges, some of these exchanges will issue a 1099 form.
Will I get a 1099 form about my Ethereum transactions?
Many US crypto investors have received 1099 forms regarding their crypto transactions. Whether you’ll get a 1099 form depends on the exchange you’re using and the transactions you’re making.
The majority of large crypto exchanges issue 1099-MISC forms to US users with more than $600 in crypto income. So if you’re staking ETH using a large centralized exchange - like Coinbase, Binance or Kraken - and earning more than $600 in a single financial year, you may well receive a 1099-MISC form. If you are going to receive a 1099 form, you’ll generally receive it by February of the following tax year at the latest.
You can see a full list of exchanges that issue 1099 forms in our crypto 1099 guide. But remember - if you got a 1099 form, the IRS got one too.
Do Ethereum wallets issue a financial statement?
In general, no. You won’t receive a financial statement regarding your Ethereum transactions from the majority of crypto exchanges or ETH wallets.
You can however use your Ethereum transaction history to create a financial statement which you can use to calculate your crypto taxes. Here’s how to get your transaction history through CSV and through API.
Ethereum CSV Export
Some ETH wallets let you download a CSV file of your ETH transaction history straight from their platform. You’ll need to make sure you have CSV files that cover your entire ETH trading history to calculate your crypto taxes correctly though. So you’ll need a CSV export for each ETH wallet you use, as well as a CSV export from any crypto exchanges you’ve used to trade or earn ETH.
If you’re using an ETH wallet that doesn’t let you download a CSV file of your transaction history, don’t panic - there’s a work around. You can use blockchain explorer Etherscan to get a CSV file instead.
Just head to Etherscan and search for your wallet address. Now scroll to the bottom of the page, fill out the dates you want to cover for your transaction history, complete the captcha and hit download.
Of course, depending on how active an investor you are and how many ETH wallets and crypto exchanges you’re using, the amount of CSV file(s) you end up with can quickly become unmanageable.
That’s why you might prefer option two - use the ETH API.
Ethereum tax API
You can use a crypto tax calculator to skip the spreadsheets and fetch your ETH transaction history for you using the Ethereum API.
All you need to do is connect each wallet and crypto exchange you use to trade ETH with your crypto tax app using API. For the majority of ETH wallets, this is as simple as getting your public address and inputting it into your crypto tax app. For the majority of crypto exchanges, it’s as simple as generating a new API key and then copying and pasting your API key and API secret into your crypto tax app.
We’ve got step-by-step instructions on how to connect all the most popular ETH wallets and crypto exchanges with Koinly in our integration pages.
Do ETH wallets supply an end of year statement?
No. Neither ETH wallets nor the majority of crypto exchanges will supply you with an EOFY statement regarding your ETH transactions. You’ll need to get your Ethereum transaction history using one of the methods above instead.
Can the IRS track ETH?
Yes. The IRS can track ETH and other cryptocurrencies.
If you’re trading ETH on any large centralized crypto exchange, the majority of these exchanges issue users with 1099-MISC forms. They may also share KYC data with the IRS to ensure tax compliance.
If you’re using ETH wallets, you might think there’s no way the IRS can know about your ETH as many of these have no KYC verification. This is true - to an extent. But if you’re transferring your ETH between your non-custodial wallet(s) and exchanges, these exchanges will still have the data the IRS needs to track your ETH.
In some instances, you may have linked a bank account to your ETH wallet - like with MetaMask. All registered financial institutions - including banks - can share customer information with the IRS to ensure tax compliance.
The best way to remain tax compliant is to calculate and report your Ethereum taxes correctly.
Can other tax authorities track ETH?
The IRS isn't the only tax office cracking down on crypto tax evasion. Other tax offices around the world like the ATO, the CRA and HMRC are taking the same approach. Many crypto exchanges share KYC data with a variety of tax offices to ensure tax compliance.
How to generate an Ethereum tax report
The Ethereum tax report you need to generate will depend on where you live and your tax office. But in general you can either do this manually or with an Ethereum tax calculator - so let’s look at both.
Doing it yourself? Good luck! You need to compile your complete ETH transaction history and identify your cost basis for each individual asset. Then you need to identify each taxable transaction and what kind of tax applies. Next up, calculate any subsequent capital gains or losses from disposals of ETH or ERC20 tokens, as well as the fair market value of any ETH or ERC20 tokens on the day you received them in your country’s fiat currency. You then need to report this to your tax office.
The exact amount of information you need to report differs from country to country. Some tax offices only want your net capital gain and loss and a total figure for additional income, while others (like the IRS) want you to report every single disposal of ETH, with information on your cost basis, proceeds, capital gain/loss and the dates of each transaction.
Yes, it’s a lot of work - especially if you’re a DeFi investor with thousands of transactions in a single financial year. So save yourself hours by using an ETH tax calculator like Koinly.
All you need to do is connect all the crypto wallets and exchanges you use using API or by importing a CSV file of your transaction history. Your crypto tax calculator will then identify your cost basis, each taxable transaction, calculate your capital gains and losses and identify the fair market value of any crypto income on the day you received it for you. All you need to do come the tax deadline is download a pre-filled report, based on your location, ready to hand over to your accountant, submit to your tax office or upload to your chosen tax app.
If you’ve been wondering is Koinly an Ethereum tax calculator tool, the answer is, yes! Not only can Koinly import Ethereum transaction history, but Koinly can also calculate your ETH taxes in a format that makes sense for your country’s tax office. As a ETH tax calculator, Koinly is able to do a bunch of impressive tasks that save you time and can even save you from paying too much taxes.
As a quick breakdown, here’s a short summary of what Koinly does:
- Imports all your trades including purchases, sales, swaps, and rewards.
- Converts your transactions into your country’s currency at fair market value (this in itself is a massive time saver).
- Deciphers which of your ETH trades are taxable and which are not.
- Helps you submit a clean and accurate report to your tax office.
Best of all, Koinly is totally free to use to calculate your ETH taxes. You’ll only need a paid plan when you want to download your crypto tax report.
Sign up free and try our Ethereum tax calculator today.