Binance taxes cryptocurrency as property because that’s how the U.S.A. and other countries collect it. Binance processes more than $1 billion-a-day and works hard to keep on the good side of the government and their tax agencies—especially since America’s an extremely good client and failure to report your cryptocurrency taxes can result in IRS fines up to $250,000 (and prison!).
Binance Taxes are Easier
To make Binance taxes easier, they introduced Binance coin. Binance coins finance exchange fees and make it easier to account for all the transaction fees including exchange fees, listing fees, and trading fees. While the Internal Revenue Service (IRS) looks at Binance taxes as property tax, Binance no longers allows American traders on their main website. Instead, it requires Americans to use the Binance US website.
World’s Biggest Cryptocurrency Exchange
Binance has become one of the world’s biggest cryptocurrency exchanges since it opened in July 2017. The name comes from binary and finance. Binance used to be the wild child of the cryptocurrency world but matured into a regulatory-compliant business. As it has grown, it added fiat ramp, a decentralized exchange, and margin trading.
Millions of Users from Around the World
With several million users from around the world, Binance needs to make paying taxes easy for its users no matter where they live. The taxation of digital assets can be complicated as cryptocurrency can be volatile and Binance trades over 170 coins to buy, sell, and trade. As crypto becomes more mainstream and larger parts of investors’ portfolios, getting right with taxes is essential for Binance’s users.
Cryptocurrencies are Property
In 2014, the Internal Revenue Service of the United States classified cryptocurrencies as property. Before the ruling, there was no real accountability to the IRS for buying and selling—and holding—Bitcoin. Miners, buyers, sellers, and traders probably didn’t pay taxes on their cutting-edge investments; and, their bookkeepers, CPAs, and tax-preparers didn’t know anything at all about crypto. Binance isn’t an exchange for beginners like Coinbase, but it’s become popular with novices and experts alike, whether Binance taxes or not.
File your Binance Taxes
It’s not easy to generate your tax reports or build your tax forms and file your Binance taxes. Cryptocurrency is volatile. In addition, there are so many of them and the market is so complex that the fair market value of your combined assets in a fiscal year is difficult to calculate. Binance has no way to determine the cost basis of your cryptocurrency buys or sells, especially if traders jump away from Binance or move to the exchange. It also can’t follow all airdrops, mined coins, and swaps. It also trades a wide variety of tokens, many of which aren’t supported by other crypto exchanges.
IRS 8949 and 1040 Schedule D
If you can export your trade history and compute capital gains and losses, you can then report it on IRS 8949 form and 1040 schedule D. Of course, you can always just use a crypto tax software as it automates Binance taxes.
Two reputable online tax prep software options that support Binance include cryptocurrencies are CoinTracker and CryptoTrader.tax.