There are a few steps you should always take to ensure your tax reports are as accurate as possible. In this article, we will go through the six most important steps.
Step 1 - Add all your wallets and transactions
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. It is therefore important you add all exchanges, wallets, blockchains, and apps to Coinpanda.
Step 2 - Verify your balances
After adding all wallets and importing transactions, you should make sure that your balance displayed on Coinpanda actually matches what you have in reality. The simplest way to do this is to summarize all your crypto holdings in a simple Excel or Google sheet, and then compare the amount for each coin with what you see on the Dashboard page on Coinpanda.
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:
Double-check that you have added wallets for all exchanges, blockchains, services, and apps where you have bought, sold, traded, received, or sent any cryptocurrency
Verify that all transactions have been imported for each wallet. Most exchanges let you see a complete trade history from their web interface which you can compare with the transactions imported to Coinpanda.
Check if any values from your balance are either way too low or high. For example: if you have transacted with BTC, ETH, XRP, EOS, and USDT, and BTC and USDT are the only coins for which your balance does not match, you have narrowed down transactions with BTC-USDT to be the reason.
Note that some exchanges have certain limitations. 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 for the last 3-4 months only, such as Huobi and Bibox. 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 remember that there are special tax rules for coins received from airdrops, staking, and mining, or if you have sent crypto as a gift, donation, or lost access to your wallets.
You should therefore make sure to tag all Receive and Send transactions correctly. For example, if you have received coins from airdrop or staking, this should be reported as income and not as capital gains in most countries. 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, reward, staking transaction, etc.
Luckily, Coinpanda makes this very easy as you can simply go to the Transactions page, filter for Receive or Send, and check that each transaction is labeled correctly. Coinpanda will then include them in a separate income and expense section in the Complete Tax Report.
Step 4 - Classify internal transfers
All internal transfers (ex: crypto sent from Binance → Coinbase) should be classified as Transfer transactions. You can verify this by going to the Transactions page, filter for Receive or Send, and set the filter for Label to 'No label'.
The next step is to check if any of the transactions listed are internal transfers. See our article about how Coinpanda handles internal transfers to learn how to fix this.
Step 5 - Sort by highest gain/loss
If everything looks good so far - congrats! You have now come a long way and most of the hard work should be done.
To check if any transactions result in an unrealistic high gain or loss, simply 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 gain looks too high to learn how to fix this.
Step 6 - Check for any warnings
Coinpanda comes with a built-in tool for verifying that there are no transactions or price data missing. On the Transactions page, you can filter for transactions with warnings/errors 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 there is 0.5 BTC missing in your balance. This tells you that there must be one or more transactions missing prior to this date.
The market rate is missing for coin XYZ
While Coinpanda supports more than 7000 cryptocurrencies, we don't sync market rates for all cryptos on a daily basis (e.g. 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 will need to manually enter the value/cost for the transaction.
If you have traded a coin that is listed on those sites but we haven't added it yet, you can post a request for missing currencies in our community forum and we will add it the next day.
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 just assume a cost basis equal to zero for these trades. This can increase your total capital gains, but since it is a conservative approach it is accepted by all tax authorities.