What Is Binance Tax and When Will It Come to the US?
Reading Time: 3 minutesBinance Tax could become the easiest way to get your crypto tax affairs into order.
Crypto trading can be complicated, especially when you start adding in all the small hidden charges and fees that come with the process. Adding to that, governments are now trying to regulate crypto by levying taxes on trading.
Calculating your crypto tax and making adjustments accordingly can be overwhelming, especially if you’re not well acquainted with what you’re doing. Binance hopes to change this by launching a new crypto tax calculator.
What Is Crypto Tax?
Since tax authorities usually treat crypto as capital assets, different countries levy different percentages of tax on any profits that will or have been incurred by crypto-related transactions.
The exact taxable conditions and brackets are different, so you’ll be better off consulting your local laws to figure out what you owe the government. Considering paying your taxes is a legal obligation, there’s no room for error.
That’s where crypto tax calculators come into play. They can import your trades from multiple exchanges and trading platforms with reports for filing capital gains and income. You can then find out your total owed tax for cryptocurrencies and even NFTs, if applicable.
What Is Binance Tax and How Does It Work?
Binance Tax is the trading platform’s in-house tax calculator that imports your Binance transactions and gives simple but detailed reports of your tax obligations based on your jurisdiction.
It can be accessed on Binance and uses your existing Binance account to check supported transaction types. You’ll be able to choose from ‘Realized Capital Gains,’ ‘Income Gains,’ and ‘Transactions,’ which will then generate a downloadable tax report with a summary of any gains or losses.
The tool can process up to 100,000 transactions, including but not limited to spot trades, crypto donations, and blockchain fork rewards. That said, Binance has warned that the tool is still in its early development phase and doesn’t cover all types of transactions on the platform just yet.
It also doesn’t support other Binance transactions like futures trading and NFTs, meaning traders using the tool will have to adjust accordingly. Finally, the tool also doesn’t integrate with other platforms or Web3 wallets. Binance is taking its time to see which integrations and improvements will be ‘beneficial for the product.’
Where Can Binance Tax Be Used?
Currently, Binance Tax is only available as a beta tool in Canada and France. While the company hasn’t provided any details yet, it plans to launch in other global markets later in 2023. Since crypto regulations and taxes can vary significantly from one region to another, you’re going to have to wait until Binance releases the calculator for your region to be able to get accurate reports.
Should You Use Binance Tax?
If you’re an active crypto trader using Binance, you should. Granted, it has limited functionality and only covers specific transaction types on the platform, but using a tax calculator can save traders hours of work and the accompanying stress.
Additionally, the margin for error or mistakes is far lower than doing these calculations manually. Since a tax calculator’s accuracy is largely based on its developers, you can rest assured, considering it’s an in-house tool from Binance.
However, the tool is too late for several regions, such as the UK, as tax deadlines have already passed. The deadline for crypto traders in the US is April 18, so they can use the tool before next year, but it’s unclear whether Binance will release it in time.
Binance Tax isn’t the first attempt at making crypto tax software, either. However, having your tax calculator neatly integrate with the online trading platform of your choice is a major convenience.
Demystifying Crypto
Using a tax calculator can go a long way in simplifying your tax estimation process, not to mention making them easier and more accurate. As Binance Tax rolls out in more countries and adds more features, it’ll significantly help crypto traders worldwide.
Crypto has had a difficult few years, dealing with numerous scams, data breaches, and entire exchange collapses. As a result, companies are now actively trying to make an effort to demystify concepts like crypto, blockchain, and NFTs and improve the crypto world’s reputation.
Reference: https://www.makeuseof.com/what-is-binance-tax-when-will-it-come-to-us/
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