We are pleased to announce that we have partnered with CoinTracking (https://cointracking.info/?aa=507) to make it easier for all of our traders to report their taxable income. CoinTracking is the industry leader when it comes to the tracking and reporting of cryptocurrency transactions for taxes. CoinTracking will perform an in-depth analysis of your trades and generate real-time reports on profit and loss, the value of your coins' realized and unrealized gains, reports for your taxes, and a great deal more.
How are cryptocurrency transactions taxed?
Capital gains and losses are incurred whenever you sell, trade, or otherwise dispose of your cryptocurrency. Your capital gains and losses from cryptocurrency trading and investing must be reported on your tax return. The exact amount of tax you pay depends on the applicable laws and regulations of the territory in which you reside, and/or are subject.
Example: Mary purchased 1 bitcoin for $5,000 on MEXC. Mary sells the bitcoin for $15,000 two months later. In this simple example, Mary must report a capital gain of $10,000 on her tax return.
Depending on her income tax bracket, Mary pays a certain percentage of the gain in taxes. Rates vary according to tax bracket and short-term versus long-term gains.
How do I calculate my crypto trading gains and losses?
To determine your capital gains or losses when selling cryptocurrency, you simply subtract the asset's cost basis (i.e. original value at which you purchased the asset) from its current market value. The following equation illustrates how this works:
Cost Basis - Fair Market Value = Capital Gain/Loss
Do I owe taxes if I simply buy and hold?
No! Buying and holding cryptocurrency does not create a taxable event. You will only realize gains and losses when you sell your cryptocurrency (sell, trade, or use it to purchase goods or services). The following (non-exhaustive) events constitute generating gains and losses:
1) Trading cryptocurrencies for fiat money
2) Exchange of one cryptocurrency for another
3) Purchasing goods and services with cryptocurrency
4) Earning income in cryptocurrency (including cryptocurrency earnings from mining and staking)
Advantages of MEXC for Taxpayers
When it comes to tax time, MEXC offers a number of benefits to traders. Not only is the platform designed from the ground up to provide complete transaction history transparency, it is also one of the few crypto exchanges that provide transaction logs of each and every crypto trade and movement, including your spot/margin and futures history.
MEXC users are able to export transaction history as a spreadsheet (csv) or via the system's API. This will be explained in the section titled "How to Export Deposit & Withdrawal History" and "How to Export Transaction Record".