Are you looking for an Accessible guide to Binance Tax? Check this out

Binance seems to be gaining a lot of traction from novice crypto traders and experts alike, seeing how it is the biggest crypto exchange by trading volume. This platform has its own cryptocurrency called Binance Coin. BNB is commonly used to refer to this cryptocurrency. Binance Coin is similar to Ether and is based on the Ethereum blockchain. Given its growth in popularity, you ought to get a decent grip on Binance, Binance tax, and so forth.

What can Binance be used for?

Binance finds its place in a multitude of scenarios. Here are some cases where Binance can be used:

• Binance can be used to pay transaction fees
• You may use Binance to buy IEO tokens
• Also, you can use Binance to handle your travel expenses

You can use the BNB token to trade on Binance's trading platform. If you happen to be trading in Binance coins, you may get a discount of up to 25% on your trading fees.

How do you benefit from Binance?

Binance is known to allow crypto traders to avail a discount if they commit to orders on the Binance exchange. By default, crypto traders have to pay a fee that is a fixed 0.1% of each committed trade, which is way less than the default fees of various other crypto trades. You can find the BNB coin on the top 10 list on Coinmarketcap, and it is expected to grow. Due to this, many crypto exchanges have started to list BNB.

The basics of Binance Tax

You generally utilize the Binance coin to finance the fees levied by the Binance exchange for the services it provides. The fees that you will have to pay include exchange fees, listing fees, and trading fees. Binance found its footing in 2017. Given how popular Binance has managed to become, you need to understand how the Internal Revenue Service (IRS) looks at Binance tax. If you have been exposed to cryptocurrencies, you would probably assume that the IRS treats Binance Tax like property tax, which means the same rules apply. This holds for other cryptocurrencies as well.

What should you keep in mind about Binance?

It is essential to note that Binance does not allow American crypto traders on their original website. However, they do have a new website for US-based crypto traders called Binance.US.

How does Binance Tax work?

Contrary to what you might believe, it is not all that easy to build your Binance tax forms and file your Binance taxes. Getting the required Binance tax reports can be difficult for numerous reasons.

• First of all, you need to perform all Binance trades in cryptocurrencies. In other words, you will have to calculate the Fair Market Value in a fiat currency like USD whenever you carry out your transactions. However, Binance does not keep track of this information, which is why calculating your Binance tax is an arduous task.
• Secondly, Binance has no way to determine the cost basis at which you purchased or sold your cryptocurrency. Knowing your Cost basis is paramount if you want to calculate your Binance tax accurately.
• Finally, you will need to consolidate your Binance-related data and information to build your Binance tax forms effectively. This consolidated information comprises your trades, sales, purchases, airdrops, exchanges, mined coins, and swaps.

Knowing how to pay your Binance Taxes

If you want to pay your Binance taxes efficiently, make sure you export all your trade history data, and then compute your capital gains and losses for each transaction that you perform. Then, you will have to report all your tax events on the IRS 8949 form, after which you declare your net gain on form 1040 schedule D.

The alternative to this is calculating your Binance taxes by using a cryptocurrency tax software of your choice. A crypto tax software automates the process of filing your crypto taxes.

Which Crypto Tax Software should you go for?

Here are some incredible crypto tax software you can utilize to calculate and pay your Binance taxes.

CoinTracker

CoinTracker is a reputable hybrid crypto-asset tracker and cryptocurrency tax reporting software. It can synchronize your transactions from your crypto exchanges automatically, thereby keeping all the relevant data up to date. CoinTracker features a performance tracker, which you can use to track your crypto investments.

This way, you get a clear picture of your crypto investment performance. Some of its lesser-known features are capital gains, cost basis reports, and automatic synchronization with crypto exchanges and wallets. Additionally, it is integrated with TurboTax.

CryptoTrader.tax

CryptoTrader.tax is a cryptocurrency software that lets crypto traders calculate their capital gains and losses with ease. It is compatible with numerous exchanges, including Coinbase, Bittrex, Binance, Gemini, and many more. If the user happens to be using an unsupported exchange, they can upload their trading information using the CryptoTrader.tax's exchange template.

After you import your trades, CryptoTrader.tax will compute your tax liability through the 'First in First out' (FIFO) method. This software typically provides users with tax documents that they can export for filing, including the IRS 8949 form.

One of CryptoTrader.tax's noteworthy features is its audit trail. The audit trail feature can detail each calculation that you use on your tax filing report to get your proceeds. This feature has details like closing positions, total income, and so forth.