Binance Taxes Guide

Do you trade on Binance and fear taxes? Binance is the most popular exchange for cryptocurrency trading worldwide, with many features from spot trading to the latest NFT market.

However, the various coding activities out there may lead to distinct tax treatments that you should be aware of before getting started. Today, we cover all the taxes involved when using Binance.

US Binance Taxes

Many US residents were trading on Binance until recently, but Binance no longer supports US residents.

Today, we cover all the tax implications for US customers who have been using Binance until the ban and who need help reporting past cryptocurrencies. We’ll cover everything from receiving staking rewards from Binance, trading NFTs, and trading cryptocurrencies, to the many things you can do with Binance.

How are cryptocurrency trades taxed on Binance?

If you trade crypto on Binance, you will have to report your trade, and you will be subject to capital gains taxes in the US.

In the United States, according to the IRS, every FIAT or Crypto to Cryptocurrency trade is a taxable event, subject to capital gains taxes. With Binance, you can trade hundreds of cryptocurrency pairs against other cryptocurrencies/stable coins/FIATs.

In all of these scenarios, you will have to pay capital gains taxes if you have a profit. Your cost basis will be the price you got from the initial cryptocurrency, and your capital gain/loss will be the difference between your sales revenue for the trade and your cost basis.

Don’t forget that even trading cryptocurrency for stablecoin or stablecoin for another stablecoin is a taxable event in the US, which you need to report even if your profit/loss is marginally small. Learn more about stablecoin trading and its taxes.

How are crypto margin trading on Binance taxed?

You will have to pay capital gains taxes if you profit from spot trading, margin trading or futures. If you use leverage, your cost basis is the same as if you weren’t using it, but the chances of winning/lossing are much higher, so the only difference is probably the higher capital gains tax that will have to be paid if you have a big profit from trading Margin/Forward.

Are Binance fees tax deductible?

The tax treatment of the fees you paid on Binance depends on the nature of the fees. If it’s a trading fee, you’ll be able to use it to offset a portion of your sales revenue, thereby reducing your capital gain (or increasing your loss). If it is a transfer fee, it is considered an investment expense, and is not tax deductible for individual investors under current tax law.

Please note that if you are using a third currency in a crypto-to-crypto-to-crypto or crypto-to-FIAT trade (for example, paying BNB trading fees for BTC-to-SOL trading), you should treat it as a feat. Sell ​​FIAT’s third coin, then immediately use the sales proceeds to pay the trading fee. In other words, the capital gain/loss of using a third currency is likely to be recognized as a trading fee, which is calculated based on the FMV (in US dollars) of the currency and the currency basis.

Is income from Binance taxable?

If you are earning crypto income from Binance (eg interest-earning vehicles, staking bonuses, referral bonuses, etc.), you will need to know the fair market value (in USD) of the income when you receive it. Then, you will have to report this on your income tax return.

Let’s take a look at more details about the different forms you can earn crypto income from Binance.

Do you have to pay taxes to earn Binance?

In the US, if you receive an interest in Cryptocurrency or FIAT from Binance Earn, you will have to recognize this interest as ordinary income. At the time you receive the interest, you must determine its fair market value (in US dollars) and report it as ordinary income when you file your tax return.

Learn more about taxes when earning cryptocurrency interest.

Do staking rewards on Binance count as income?

In the US, if you receive crypto staking rewards from Binance, flexible savings, ETH 2.0 staking, or any other vehicle from Binance in which you earn rewards, you will have to pay income taxes on them. In the US, you must determine the fair market value (in US dollars) of crypto rewards at the time of receipt and report it on your income tax return.

Learn more about taxes when receiving crypto staking rewards.

Are NFT sales on Binance taxable?

Binance recently launched its NFT Marketplace, where you can sell your creations or trade NFTs. In the United States, NFT trading is a taxable event, subject to capital gains taxes. As a result, if you are trading NFT for FIAT, stablecoins or any cryptocurrency, you will have to determine the gain/loss on those trades and report it on your tax return.

However, if you are an NFT creator and sell your artwork on the Binance NFT Marketplace, you will have to recognize such sales proceeds as ordinary income and report it on your income tax return. Being an NFT builder has different tax reporting requirements than trading NFTs/crypto as an investor. Check our NFT tax guide for more information.

Do You Pay Taxes If You Spend Cryptocurrency With a Binance Visa Card?

Spending cryptocurrency to pay for products or services with a debit or credit card is a taxable event in the United States. When you buy a cryptocurrency product, you are treated as if you were converting that amount of crypto to FIAT. Such a transaction is a taxable event in the United States, and is subject to capital gains taxes.

You need to determine the fair market value (in US dollars) for that amount of cryptocurrency when you first purchase it. Sales revenue is the amount of cryptocurrency sold at the time the product was purchased. The difference between the two is the capital gains you have to report and pay taxes on.

Learn more about the tax implications of spending cryptocurrency on products or services.

Can You Get a Discount on Binance Crypto Loan?

If you take out a crypto loan in the United States, you can deduct your interest expense, if it’s considered investment interest, against your investment income, such as interest or betting income. In this case, you can deduct the interest expense on your tax return if you claim itemized tax deductions.

There are more ways to reduce the crypto tax bill in the US, including harvesting crypto taxes or holding cryptocurrencies long-term to get a lower tax rate.

Check out this guide on how to reduce crypto taxes.

Tax Reporting on Binance

You need to report all gains and losses from cryptocurrency trading and the income you receive from Binance on your tax return.

If you have a gain/loss from cryptocurrency trading, NFT trading or cryptocurrency trading on a BSC decentralized exchange, you will have to report these trades on your tax return and pay taxes on your capital gains.

If you receive any income from earning interest on Binance, receive an airdrop to your Binance wallet, receive staking rewards, or receive income from selling your NFT creations on the Binance NFT Marketplace, you will have to determine the Fair Market Value (in USD) )) of your income when it is received and reported on your income tax return.

Using crypto tax software like CoinTracking can make it easier to track all different types of income and deals and determine the FMV of your income and gain/loss from your trades.

There are several ways to export your transactions from Binance and import them to CoinTracking. Watch this video for the steps:

Does Binance give you 1099?

Binance is not issuing a 1099 form to its clients because it is not a US-based exchange, and no longer serves US clients.

Does Binance Report to Tax Authorities?

Binance is not a US-based exchange, and does not file anything with the IRS. However, Binance US may comply with US tax laws and file tax reports with the IRS.

Best Binance Tax Calculator: CoinTracking

The best crypto tax software to import and track your trades on Binance is CoinTracking.

You can import your trades using CSV or API, track your gains/losses, and generate tax reports according to your preferred method of accounting.

Beyond Binance, CoinTracking is your complete crypto tax solution for:

Moreover, CoinTracking can easily categorize all your earnings from yield farming, liquidity pools, cryptocurrency storage, and much more.

Do you pay taxes on Binance?

Yes. Depending on your crypto activity, you will face different tax treatment in the US for using Binance.

In short, you will have to pay the following taxes:

  • Cryptocurrency Trading for Other Cryptocurrencies: Capital Gains Tax

  • FIAT Cryptocurrency Transfer: Capital Gains Tax

  • Trading in cryptocurrency for stablecoins: Capital Gains Taxes

  • Trading NFTs as an Investor: Capital Gains Taxes

  • Selling NFTs as an NFT Builder: Income Taxes

  • Receiving staking rewards: Income taxes

  • Receiving Interest from Binance Earn: Income Taxes

  • Cryptocurrency Trading on BSC Decentralized Exchanges: Capital Gains Tax

  • Receiving Airdrops from BSC Decentralized Protocols: Income Taxes

Binance Taxes with No Errors: CoinTracking Full Service in the US.

CoinTracking also offers a full service for US traders. A crypto settlement tax expert from Polygon Advisory Group, a leading US tax firm, will review your CoinTracking account, help fix any errors, and ensure your crypto tax reports are submitted flawlessly.

Do you have any questions about crypto taxes? Check out the best guides:

  1. DeFi Taxes: The Complete Guide.

  2. How to save taxes with a Bitcoin IRA.

  3. Do you pay taxes to receive bitcoin tips?

  4. Uniswap . Tax Guide

  5. Is cipher wrap taxable?

  6. How do you calculate taxes at the average dollar cost of bitcoin?

  7. Do you pay taxes on stolen, hacked or lost cryptocurrency?

  8. FIFO for Crypto Taxes? The implications of accounting methods.

  9. NFT Taxes: The Complete Guide.

  10. NFT Guide 2021 (with taxes).

  11. Is bitcoin taxable? The Ultimate Guide to Taxes for 2021.

  12. Do You Pay Taxes on Bitcoin Debit Card Purchases?

  13. The most tax-friendly countries for cryptocurrency.

  14. How do you reduce your crypto taxes?

  15. Crypto tax loss harvest: Here’s what you need to know

This post is part of the Crypto Taxes AMA series. Follow the weekly AMAs on Twitter as our expert CPA Sharon Yip answers your crypto tax questions. You can download 30+ AMA Crypto Tax Report for free.

Disclaimer: All information provided above is for informational purposes only and should not be considered professional, legal or tax advice. You should do your own research or consult with a professional financial advisor when investing.

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