SushiSwap taxes are easy to do when you know what the reporting requirements look like, the tax implications of trading cryptocurrency on a decentralized exchange, and have the tools at hand to help you comply with taxes.
Sushi Swap is the second largest Decentralized Exchange (DEX) in the market by daily volume, with just one year to go, becoming one of the most popular brands in the crypto space.
Decentralized exchanges such as Uniswap and SushiSwap offer more flexibility and anonymity to merchants and businesses, but the tax obligations in the US remain. Let’s find out how to do your Swap taxes.
How is SushiSwap taxed?
SushiSwap trades are taxed like any US cryptocurrency trades. All crypto-to-crypto and crypto-to-FIAT trades in the US are taxable events. With SushiSwap, you can exchange one token for another, which is a cryptocurrency trading cryptocurrency, classified by the IRS as a taxable event.
You will need to calculate your capital gain/loss on cryptocurrency trading by determining the cost basis at the time of your purchase of the original cryptocurrency. The difference between sales revenue and cost basis gives you the capital gain/loss from the trade. Learn more details about taxes in cryptocurrency trading.
Do you have to pay taxes on decentralized exchanges?
Although SushiSwap and other decentralized exchanges offer anonymity to their users, they do not alter the taxable events that occur when using such exchanges.
If you use other popular DEXes like Uniswap, the need to report crypto tax is the same. So, yes, you do have to pay taxes when using decentralized exchanges to trade cryptocurrencies.
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DeFi Taxes: Do You Pay Taxes on Decentralized Finance?
Decentralized Finance (DeFi) includes a wide range of crypto activities other than cryptocurrency trading. These include rewards, earning interest, taking cryptocurrency loans, joining a liquidity pool, and many more.
Any crypto trades you make in the DeFi protocol will be a taxable event, resulting in a capital gain. Also, other operations such as gaining interest in cryptocurrencies or receiving crypto compliments will add to your total taxable income for the year.
The tax treatment of liquidity pools is still new, whether they acquire new tokens from flexible or locked-in savings vehicles. We encourage you to review our complete guide to DeFi taxes to clarify these questions.
How do I report Sushi Swap for my taxes?
Any crypto-to-crypto gain must be reported on your annual tax returns. Income earned from cryptocurrency investing tools, such as earning interest, getting paid in bitcoin or receiving staking rewards, must also be reported on your income tax returns.
Different encryptions lead to distinct taxable events. If you use a DEX as SushiSwap, you need to identify and report each profit/loss on your trades on Form 8949 and Schedule D of your Form 1040.
Find out more details on how to report cryptocurrency to your taxes.
Can the IRS track DeFi?
Yes. The IRS can track many cryptographic activities over the Internet using internal and external resources (for example, sequence analysis). Recently, many cryptocurrency investors received letters from the IRS with high amounts of taxes owed from previous years due to non-reporting of cryptocurrency trading gains/losses.
Although decentralized exchange and DeFi protocols provide more anonymity for users, the IRS can still communicate with exchanges and other centralized point-to-point systems.
Furthermore, even if the IRS does not track/communicate with third parties, you are still obligated to follow tax law and report your trades.
how to Do you switch taxes on SushiSo?
Import your SushiSwap trades with ETH + DEX importer from CoinTracking.
Determine capital gains on DeFi trades using an approved accounting method.
Generate compliant tax reports.
Learn how to import SushiSwap deals into CoinTracking for taxes:
Best DeFi Tax Software: CoinTracking
CoinTracking is the best DeFi tax software on the market, allowing you to easily import DEX trades like SushiSwap and automatically calculate your winnings while generating all necessary tax reports.
If you are using an Ethereum-based DEX, you can easily import your trades in a few minutes with our ETH + DEX importer. After importing your trades, you can select one of the 12 accounting methods that CoinTracking supports, and we’ll calculate your winnings for each trade while generating tax reports.
If you are in Australia, UK or Germany, our software fully supports the different accounting methods used in those countries to generate compatible reports.
SushiSwap Taxes With No Errors: The complete US currency tracking service.
CoinTracking also offers a full service where an expert crypto accountant reviews your account, fixes any errors, and makes sure your returns are sent without errors.
The full service is currently available in the United States, Australia, and some European countries. Find out all the details here.
Do you have any questions about crypto taxes? Check out the best guides:
DeFi Taxes: The Complete Guide.
Uniswap Tax Guide.
NFT Guide 2021 (with taxes).
Is bitcoin taxable? The Ultimate Guide to Taxes for 2021.
How do you reduce your crypto taxes?
Is cipher wrap taxable?
Donating cryptocurrency: is it tax deductible?
Do you pay taxes on stolen, hacked or lost cryptocurrency?
FIFO for Crypto Taxes? The implications of accounting methods.
Crypto Tax Loss Harvest: Here’s What You Need to Know.
The three most crypto-friendly countries.
NFT Taxes: The Complete Guide.
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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