You should always take a few steps to ensure your tax reports are as accurate as possible. In this article, we will go through the six most important steps.
Step 1 - Import transactions from all exchanges and wallets
This is the single most important step to ensure accuracy. Coinpanda needs your complete transaction history across all exchanges and wallets to know your cost basis and calculate capital gains correctly. For this reason, it is crucial to add all exchanges, wallets, and blockchains you have used to Coinpanda.
Step 2 - Verify your balances
After adding all wallets and your transactions have been imported, you should ensure that the balances calculated by Coinpanda match the true balances in your accounts or wallets. The simplest way to do this is to check if the wallet page shows a yellow icon like the one seen below:
If you see this icon in any of your wallets, it means that the calculated balance is different than the balance reported by the API. Clicking the yellow icon opens a modal window that shows all the balance discrepancies in more detail:
If there are discrepancies between your balance on Coinpanda and your actual holdings, it means there are transactions that have not been imported and/or imported incorrectly. There are several ways you can investigate this, but we recommend starting with the following:
Go to the Transactions page and filter for currencies with a balance mismatch. Next, get a quick overview of all transactions with these currencies to see if you notice something that stands out. This could be things like the wrong amount, duplicate transactions, or missing transactions.
If you don't notice anything wrong after looking at all transactions, we recommend logging into the exchange and comparing the transaction history with the imported transactions. Doing this, you might find that one or more transactions are not imported to Coinpanda, which explains the balance mismatch.
You can repeat the previous step for blockchains by going to a block explorer and searching for your address.
Please note that not all exchanges let you view all historical transactions from the web interface. In this case, you can try contacting customer support and request a complete export of your transaction history.
Many exchanges also have certain limitations with importing transactions from API. For example, Binance doesn't allow syncing transactions for delisted coins or crypto purchased with fiat from API. Some exchanges also limit the trade history from API to the last 3-4 months only, such as Huobi and OKX. In this case, you will need to import CSV files containing the missing trade history to ensure the completeness of your transaction history. Read our article Exchange API limitations for more information about this.
Step 3 - Tag your Receive and Send transactions
It is important to be aware that there might be special tax rules in your country for coins received from airdrops, staking, and mining, or if you have sent crypto as a gift or donation or lost access to your wallets.
Because of this, you should ensure that all Receive and Send transactions are tagged correctly. For example, in most countries, if you have received tokens from airdrop or staking, this should be reported as income, not capital gains. Coinpanda will automatically tag all imported transactions as accurately as possible, but in some cases, you will need to do this manually if the data imported doesn't tell Coinpanda if it is an airdrop, staking reward, interest payment, etc.
Luckily, Coinpanda makes this very easy as you can go to the Transactions page, filter for Receive or Send, and check that each transaction is labeled correctly. Coinpanda will include them in the Complete Tax Report's separate income and expense section.
Step 4 - Classify internal transfers
All internal transfers between your own exchange accounts and wallet addresses should be classified as Transfer transactions. You can verify this by going to the Transactions page, filtering for Receive or Send, and selecting No label in the Label filter.
The next step is to check if any of the transactions listed are internal transfers. See our article about internal transfers to learn more about how Coinpanda handles this and how to mark internal transfers properly.
Step 5 - Sort by highest gain/loss
If everything looks good so far - congrats! You have come a long way; most of the hard work should be done now.
To check if any transactions result in an unrealistic high gain or loss, go to the Transactions page and sort by Highest gain or Highest loss. You should then easily be able to identify if the gain/loss is unrealistic or wrong for any of your transactions. Read our article My capital gains look too high to learn how to fix this.
Step 6 - Check for any warnings
Coinpanda comes with a built-in tool for verifying that no transactions or price data are missing. On the Transactions page, you can filter for transactions with warnings that need review. This might happen because of one of the following reasons:
You are selling more of coin XYZ than you have in your balance
For example, if Coinpanda has calculated that you have 1.5 BTC in your balance on the 15th of October, and you sell 2 BTC the next day, you will see a warning message saying that 0.5 BTC is missing in your balance. This tells you that one or more transactions must be missing before or on this date since you cannot have sold more than you own at the time of the transaction.
The market rate is missing for coin XYZ
While Coinpanda supports more than 500,000+ cryptocurrencies and tokens, we don't sync market rates for all cryptos on a daily basis, such as old coins delisted from exchanges. You will also see this warning message if you have sold a coin before it is listed on sites such as CoinMarketCap or CoinGecko. In this case, you have the option to enter the transaction's value manually.
It is important to mention that you are not required to fix all warnings before you download your tax reports. If you are seeing warnings for missing balance, Coinpanda will assume a cost basis equal to zero for these disposals. This can increase your total capital gains, but since it is a conservative approach, it is accepted by all tax authorities.