One of our main goals at TaxBit is to minimize the amount of taxes you pay on your crypto transactions as much as possible. In certain situations, you can subtract any trading fees associated with a disposal from the gains or losses that transaction incurs.
In this article, we'll be looking 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 on the subject HERE.
Handling transaction fees
Disposal transactions (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 that acquisition.
In both of these scenarios (lowering the total proceeds or increasing the total costs of a transaction), we used the fee you paid to reduce the overall gains you report on your disposal transactions.
Handling gas fees: trade transactions
Gas fees from ETH wallets will appear in TaxBit in one of two ways. If the fee is directly connected to a trade, the total amount being traded and the fee paid will be combined together 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 ~0.0308 ETH for 80.5969 USDC. The gas fee for that transaction was ~0.0045 ETH. When we pulled that transaction off the blockchain, we combined those two ETH amounts together (0.0308 ETH being traded, and 0.0045 ETH in gas fees) to get a total amount of ~0.0353.
As you can see, the cost basis pool used totaled the amount being traded and the gas fee combined. This increases the total cost basis of that transaction to exclude the cost of that extra ETH being spent from your reported gains.
Handling gas fees: non-trade transactions
Any other gas fees that are not directly related to a trade will likely come in as expense transactions. Examples would include: fees from failed transactions; contract interactions (like approving balances); etc. Since there are no disposals we can assign directly to those transactions, we 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 to do that, but you'll need to work with your CPA or local tax expert if you would like to deduct those from your income.
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