How to do your crypto taxes for your Trust Wallet

Table of Contents

1. Introduction: Trust Wallet Basics & Tax Obligations
2. Why Taxes Still Apply with Trust Wallet
3. Tracking Your Transactions
4. DeFi, NFTs, and Other Complex Activities
5. Choosing a Crypto Tax Tool
6. Reporting Gains, Losses, and Income
7. Frequently Asked Questions (FAQs)
8. Conclusion

1. Introduction: Trust Wallet Basics & Tax Obligations

Trust Wallet is a mobile-based, non-custodial crypto wallet owned by Binance. It supports multiple blockchains, including Ethereum, BNB Smart Chain (BSC), Polygon, and more. While Trust Wallet grants you total control over your private keys, tax obligations still apply to trading, swapping, and earning crypto via the wallet.

Key Takeaway

• You’re solely responsible for tracking and reporting your gains, losses, and any crypto income (such as staking rewards or airdrops) linked to your Trust Wallet.

2. Why Taxes Still Apply with Trust Wallet

• Property Classification: In many jurisdictions, cryptocurrencies are classified as property, which means capital gains and losses apply whenever you dispose of an asset (sell, swap, or use as payment).
• Self-Custody Doesn’t Exempt You: Holding crypto in your own wallet (vs. an exchange) offers more freedom and security, but it doesn’t negate the requirement to report profits and income.

3. Tracking Your Transactions

Key SEO Terms: blockchain explorers, transaction history, CSV export

3.1 Using Blockchain Explorers

• For BNB Smart Chain activity, use BscScan.
• For Ethereum transactions, check Etherscan.
• For other chains (e.g., Polygon, Avalanche), find the respective explorers (Polygonscan, SnowTrace, etc.).

Simply enter your public wallet address to see all incoming and outgoing transactions. Some explorers let you export a CSV file with transaction data.

3.2 Manual Record-Keeping

If an export option isn’t available or you prefer more control:

• Spreadsheet: Note the date, token amount, transaction hash, and fiat value at the time.
• Include Gas Fees: Gas fees can affect your cost basis or be deducted (in certain circumstances), so keep track of them.

4. DeFi, NFTs, and Other Complex Activities

Many Trust Wallet users engage with DeFi protocols or NFTs. These can complicate taxes because each protocol or asset might have different rules and transaction types.

4.1 DeFi Lending & Staking

• Interest and Rewards: Often treated as ordinary income when received.
• Liquidity Pool Tokens: Swapping, depositing, or withdrawing funds from LP tokens may trigger capital gains events.

4.2 NFTs (ERC-721, BEP-721, etc.)

• Minting NFTs: If you use appreciated crypto to mint, you could be incurring a taxable event.
• Buying and Selling: Selling an NFT for more or less than your original purchase price results in a capital gain or loss.

5. Choosing a Crypto Tax Tool

Key SEO Terms: CoinTracker, Koinly, Awaken Tax, TaxBit

A robust crypto tax software can simplify the entire reporting process:

1. Awaken Tax
2. • Focused on multi-chain, multi-token support, including direct wallet imports.
   • Offers region-specific tax reports (e.g., Form 8949 for the U.S.).
3. Koinly
4. • Great for DeFi and NFT tracking.
   • Synchronizes wallet addresses across various chains.
5. TaxBit
6. • Enterprise-grade security and direct integrations with major exchanges.
   • Can handle wallet imports for consistent reporting.

6. Reporting Gains, Losses, and Income

6.1 Capital Gains/Losses

• Short-Term vs. Long-Term:
• • Assets held for less than 1 year are often taxed at higher rates (short-term).
  • Assets held for more than 1 year can qualify for lower, long-term capital gains rates.
• Cost Basis:
• • The amount you paid for the asset (plus fees).
  • Important for calculating gains or losses when selling or swapping.

6.2 Income from Staking, Airdrops, and More

• Ordinary Income:
• • Staking rewards, airdropped tokens, and referral bonuses typically need to be reported as income at fair market value when received.
• Subsequent Disposal:
• • If you later sell these tokens, you’ll incur another capital gain/loss based on your cost basis vs. sale price.

6.3 Keeping Records

• Why It’s Important:
• • In case of an audit, you’ll need proof of all transactions and valuations.
• What to Keep:
• • Wallet addresses, transaction hashes, dates, amounts, fiat values, and fees.

7. Frequently Asked Questions (FAQs)

1. Is Trust Wallet responsible for my tax documentation?
2. • No. Trust Wallet doesn’t automatically generate tax forms. You must track and report everything yourself.
3. Do I owe taxes if I only transfer crypto between my own wallets?
4. • Generally, moving crypto between your own wallets is not taxable, but keep records to prove it was a non-taxable transfer.
5. How do I handle stablecoins in Trust Wallet?
6. • Swapping any crypto for a stablecoin (e.g., USDT, BUSD) can be a taxable event if the original crypto has a gain or loss.
7. What if I lost my private key or seed phrase?
8. • Losing access to your wallet doesn’t necessarily remove your tax obligations. If the funds are irretrievably lost, you may need to consult a CPA about claiming a loss.
9. Are gas fees deductible?
10. • It depends on your local tax laws and the nature of your transactions (e.g., personal vs. business). Consult a crypto-savvy CPA for specifics.

8. Conclusion

Doing your crypto taxes with Trust Wallet involves a combination of diligent record-keeping, chain-specific data gathering, and often a dedicated crypto tax tool. Every time you swap, stake, or sell an asset via Trust Wallet, you’re potentially creating a taxable event that must be tracked. By keeping thorough records and leveraging reputable software solutions, you’ll breeze through tax season without the stress of last-minute reconciliations or missing data.

Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Always consult a professional for guidance tailored to your specific jurisdiction and financial situation.

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