How to Successfully Use TaxBit

If you just started with TaxBit and are looking for tips to get started, you’re in the right place! This guide will walk you through three important steps to help you get the most out of your TaxBit account.

TaxBit is a best-in-class platform for aggregating all of your crypto assets in one place, tracking your portfolio in real-time, auto-generating your tax forms, and empowering you to make tax-optimized trades year-round.  In order to get the best value out of your TaxBit account, it’s important to ensure your account is as complete and accurate as possible.

With all that in mind, we've created this checklist for you to ensure that your TaxBit account is complete and accurate! This, in turn, will mean that the form 8949 generated for you will be as accurate as possible.

This article will walk you through these steps: 

• Step 1: Add your crypto data into TaxBit— across all time and every source 
• Step 2: Checking for missing cost basis
• Step 3: Checking your Tax Optimizer balances

Add your crypto data into TaxBit

To get started using your TaxBit account, you'll need to add all of your crypto data, across every exchange and/or wallet that you’ve used, across all time (from your first transaction to your last, as all are equally important for taxes). This is imperative for accurately tracking your cost basis to report on your disposals! TaxBit has three methods for data ingestion:  

• First and foremost: API integration. This is the easiest way to connect your data and the method that TaxBit Support always recommends trying first because it will allow you to sync any new transactions automatically. You can view a full list of the exchanges that we allow TaxBit API access HERE. We also have helpful step-by-step guides with instructions on how to link many of them HERE.
• The second method is CSV Import. You will need to import CSV files of your transactional data from any exchange or wallet that isn’t directly supported with API integration. To make things even easier for you, TaxBit has developed automated CSV converters for the data from many of your favorite exchanges. You can find a complete list of these exchanges by clicking “Add Sources” > Then “Upload CSV" > Use the search bar to locate the source of your CSV > Attach file for upload > Select "Add Transactions"

• If you have any CSV's from exchanges or wallets that are not shown on this list, you can use this CSV guide to reformat your file. You are also welcome to send your files in to the Support Team, and we'll reformat them and import them into your account. Feel free to email those files to support@taxbit.com. (Please note that it can take up to six business days for our team to get those files taken care of for you.)
• Lastly, you can always add in transactions manually. This is a great way to add one or two transactions that are missing from your account. If you need any help with that, we have a great guide HERE that can walk you through the process of manually adding.

Checking for Missing Cost Basis

Once all of your data has been added (see above section) you can start to check for missing cost basis!

Missing cost basis occurs when you dispose of an asset, but there is no record of you acquiring that asset. For more information about missing cost basis check out TaxBit's article: "What does 'Unknown Gains' mean?" 

To check for missing cost basis: 

1. Go into your "Transactions" page and click "Any Flag." 
2. Once the drop-down menu appears, select "Missing Cost Basis." 
3. From there, you will be able to see a list of your transactions with the "Unknown Gains" flag that indicates missing cost basis. Those flags will need to be resolved to ensure that all of your disposals will show up on your 8949. 

“Unknown Gains” is one of the most common flags on TaxBit accounts, and there are lots of potential ways to resolve it. Keep in mind that the first thing you should do is add all of your crypto transactions from all of your wallets and exchanges to your TaxBit account. For an in-depth explanation about what could be causing this and how to resolve, check out our help article titled: "How do I resolve 'Unknown Gains'?" 

Checking your Tax Optimizer balances 

First, let’s go over what the Tax Optimizer is. This is an amazing feature offered exclusively by TaxBit that can aid you in crypto tax loss harvesting. The Tax Optimizer can give you a quick glimpse into the potential future by showing you our unrealized gains or losses. If you would like to read more about the Tax Optimizer, feel free to check out our article titled “What is the Tax Optimizer?” 

Besides just helping you take advantage of tax loss harvesting opportunities, the Tax Optimizer can be a great way to check for accuracy in your account. The balances shown in the Tax Optimizer are calculated using the transactions in your My Transactions page. This means that if you notice any inaccuracies in your balances shown there, it is most likely caused by missing or incorrect transactional data. 

When you go to the Tax Optimizer page, you can see your totals and scroll through a list of your various assets. Choose "Optimize" on whichever asset you would like to see. From there, you can see your current asset balances!

In the screenshot below, you can see my Nexo (NEXO) balances and that the total balance of my NEXO is split up into "Pools" (categorized by the exchange that each amount is currently held in). Feel free to read more about cost basis pools HERE. 

You can use the "Quantity" amounts from each pool to compare against your exchange records. If there is a noticeable difference, then you may need to go through your My Transactions page to verify that everything is correct. 

A scenario you may encounter in the Tax Optimizer are some flagged transactions. If you click on the "Pool+" a drop down will appear showing you the different dates/amounts of your acquisitions. If you are missing important transactional data then TaxBit will show you a red exclamation point towards the bottom. You can select that to see the amount that TaxBit is unable to track the cost basis for. 

This means that you are missing either the actual acquisition transaction (buys or income) and/or there is missing transfer data. Every "Transfer Out" should be followed by a corresponding "Transfer In" and vice versa. Seeing flagged transactions in your Tax Optimizer means that when you decide to dispose of the asset, you will have missing cost basis. (See previous section for information and links about what causes missing cost basis and how to resolve.) 

It's important to note that the Tax Optimizer works best when you are on the accounting method of HIFO by Exchange. Check out TaxBit's article that outlines all of the accounting methods that TaxBit offers and how they function HERE.

There you have it! Now that you’ve linked your exchanges and wallets and ensured your crypto data is up-to-date and accurate, you’re ready to track your crypto portfolio in real-time, identify tax-loss harvesting opportunities through the Tax Optimizer, and auto-generate your tax forms when it’s time to file. We here at TaxBit want to give you the tools for ultimate success, complete accuracy with your taxes, and an overall seamless experience. 

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