If you just started with TaxBit and you're not sure what to do next, not to worry! This guide will help you get the absolute most out of your TaxBit account.
TaxBit is an excellent platform for getting all of your crypto assets in one place, so we've created this checklist for you to ensure that your TaxBit account is as complete and as accurate as possible! This in turn will mean that the 8949 form generated for you will be as accurate as possible.
What you will find in this article:
- Adding All Crypto Data- From Across All Time and Every Source
- Checking for Missing Cost Basis
- Checking your Tax Optimizer Balances
Adding All Crypto Data
You need to add all of your crypto data, from every exchange or wallet that you have 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 (link to come). We also have helpful step-by-step guides with instructions on how to link many of them HERE.
- Second 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 an API integration. To make things even easier for you, TaxBit has developed automated converters for the data from many of your favorite exchanges. The list of those is shown by clicking “Add Transactions” > Then “CSV Import.”
- 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 firstname.lastname@example.org. (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!
To check for this, go into your My Transactions page and click "No Flags." Once the drop-down menu appears, select "Missing Cost Basis." 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. For more information about missing cost basis check out TaxBit's article: "What does 'Unknown Gains' mean?"
This is one of the most common flags on TaxBit accounts, and there are lots of 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 awesome help article titled: "How do I resolve 'Unknown Gains'?"
Check your Tax Optimizer Balances
If you are on the accounting method of Specific ID - HIFO by Exchange, your Tax Optimizer is another 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 into your Tax Optimizer, you can 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 Tezos (XTZ) balances and that the total balance of my XTZ 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 (link to come).
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 method that TaxBit offers and how they function HERE (link to come).
There you have it! We here at TaxBit want you to have the ultimate success, accuracy for taxes, and a great experience overall. 😊