Binance is one of the world’s leading exchanges, and as such it comes with everything you need to know and do to settle a transaction, buy currency, invest and admittedly settle your tax returns. Many consumers who are new to the cryptocurrency space often overlook this important aspect of cryptocurrency owners.
What is Tax Reporting?
Reporting tax is an integral part of buying cryptocurrency, and while you’ll need to familiarize yourself with some of the ways that work in your jurisdiction, whether it’s the UK, the United States or Canada, you should definitely make an effort to learn how it works.
There are several ways to approach this issue with a little more understanding. You should familiarize yourself with the laws of your particular country regarding cryptocurrencies. Binance tax returns are a matter of constantly evaluating changes in the law, but it is also wise to consult with a tax professional who can walk you through the finer aspects of Binance tax returns.
Does Binance provide tax information?
Yes, Binance provides tax information, but you must understand what this entails. The exchange is required by law to keep extensive records of every transaction that takes place on the platform. The three main jurisdictions where this occurs are the United Kingdom, the United States and Canada.
For legal reasons, Binance operates in the United States as a separate entity, Binance US, and does so legally and in accordance with applicable law. Binance US offers a detailed breakdown of customer transactions based on historical transactions, as well as special forms that are prepared directly for the Internal Revenue Service (IRS), but more on that in a minute.
In the meantime, it’s worth knowing that you have the paperwork necessary to fill out the tax forms and submit them to the appropriate authorities under the applicable laws of your country
Some jurisdictions can be much stricter than others, so you should always consult with an accounting professional who can help you understand some of the finer details of how cryptocurrency tax laws work in your country, and if there are any exceptions or special rules for Binance tax returns in general.
Binance tax documents and forms
The most important thing in terms of Binance tax documentation is the quarterly reports you receive about your activities on the exchange. Binance allows you to create historical reports broken down three months at a time. So, if you want to download your trading history, you will need to do so for the periods January through March, April through June, July through September, and October through December.
Once you do that, you may want to move on to your withdrawal and deposit history, as that will be another important piece of information that you need to download and send to your IRS, whether it’s the IRS, the Canada Revenue Agency, or HM Revenue & Customs.
Binance allows you to pull all of your deposit and withdrawal history and then use the file to develop any relevant information you need to submit to your government. Depending on your jurisdiction, Binance will be required to file different forms.
In the United States, it’s a 1099-K that is filed with the Internal Revenue Source for certain transactions. By 2020, you will also need to add any use of crypto to Form 1040, which is better known as the U.S. Individual Income Tax Return.
The addition, introduced by the IRS, answered the following question: “At any time during 2020, you received, sold, sent, traded, or otherwise acquired any financial interest in any virtual currency.”
As a result, you will need to certify that you have a Binance account or assets and that you have traded or received crypto under tax reform. The additional information provided in the Transaction History section will help you stay put.
However, Binance US notes that the exchange does not provide you with financial advice and that you should always seek the services of a qualified professional who can ensure that your Binance tax records comply with state and federal regulations to avoid problems in the future.
How do you report Binance tax in Canada?
While Binance US will provide you with detailed reports from time to time, you will have to do most of the work yourself in Canada. That doesn’t mean Binance does it on purpose.
Accounting services are there for service, and Binance is a Third Party Settlement Organization. So, the exchange will provide you with a detailed list of everything you need to file a legal tax return form, including transaction history, but calculating those that are relevant to Canadian regulation is your sole responsibility.
Based on current Canadian law, the Canada Revenue Service states that: “Capital gains from the sale of cryptocurrencies are generally included in income for the year, but only half of the capital gains are taxable.”
In other words, 50% of any amount you receive from trading, buying or selling cryptocurrencies will be taxed at the marginal tax rate, which is ideal and makes Canada one of the best jurisdictions to settle your tax.
However, you must be a legal resident of the country, or at least legally eligible for such a settlement. For example, you cannot go to Canada if you are a U.S. resident to take advantage of perhaps a better tax rate on your crypto income.
Binance’s tax reporting settlement in the U.K.
The United Kingdom is an interesting jurisdiction when it comes to sorting out your Binance tax returns. The country was one of the first to impose a preliminary crypto tax as a guide, covering a range of activities including, but not limited to:
- Payment Systems
- Service providers
The laws that tax certain activities will be slightly different, and you won’t have to pay value added tax or VAT on mining transactions, but again, businesses and stores have to pay VAT on their crypto transactions if they reach the threshold.
How do I get taxed on Binance?
All of this is still maybe just a little out of reach for you, but that’s okay. Settling your Binance tax returns is important, and it’s not easy when you first try your hand at it. The good news is that once you get into the habit of keeping track of your transactions, you’ll be on top of your tax game.
There are three ways that we think are viable options for crypto-tax settlement. One is to use an automated website that will ask you to upload CSV files of your trading history and transactions.
Second, always consult with an accountant who can run the numbers for you and serve as final confirmation that you are in the clear and therefore able to proceed with filing your tax form.
A third option is to have you do the numbers yourself. This is a good way to deal with Binance tax and keep your information safe and confidential. However, we recommend that you consult with an expert and get the necessary knowledge before you do this.