One of our main goals at TaxBit is to minimize the amount of taxes you pay on your crypto transactions. In certain situations, you can subtract any trading fees associated with a disposal from the transaction’s gains or losses.
In this article, we'll look at the transaction details window for a handful of different fee transactions. If you're unsure of how to view those details in your account, check out our guide HERE.
Handling transaction fees
Disposal transactions, such as sales, trades, or expenses, will have any fees related to that transaction subtracted from the total proceeds.
Acquisition transactions, specifically buy transactions, will have that fee added to the total cost of the acquisition.
In both of these scenarios, lowering the total proceeds or increasing the total costs of a transaction, we used the fee to reduce the overall gains you report on your disposal transactions.
Handling gas fees: trade transactions
Gas fees from ETH wallets will appear on TaxBit in one of two ways. If the fee is directly connected to a trade, the total amount being traded and the fee will be combined when assigning cost basis pools. As such, you'll see a message that says, "Fee included in cost basis," for a lot of your ETH wallet trade transactions.
In this example, I traded 0.74032744 ETH for 1341.49 UBT The gas fee for that transaction was 0.01967256 ETH. When we pulled that transaction off the blockchain, those two ETH amounts were combined—0.74032744 ETH being traded and 0.01967256 ETH in gas fees for a total amount of 0.76 ETH.
When the cost basis pool combined the amount being traded and the gas fee, the total cost basis of that transaction increased to exclude the cost of the extra ETH being spent from my reported gains.
Handling gas fees: non-trade transactions
Any other gas fees that aren’t directly related to a trade will likely come in as expense transactions. Examples would include fees from failed transactions or contract interactions like approving balances. Since there are no disposals, TaxBit can assign directly to those transactions and bring them in as general expenses.
These won't be used to reduce your overall capital gains or losses. In fact, you may see small gains on those expense transactions. Depending on your overall tax profile, you may be able to use these expense transactions to deduct from your total taxable income if you're itemizing your deductions. We can provide the raw data you need, but you'll need to work with your CPA or local tax expert if you’d like to deduct these transactions from your income.
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