A Beginner’s Guide to Crypto Taxes Using CoinTracking

This is a complete guide covering how to file crypto taxes using CoinTracking, from requirements, importing transactions, generating tax reports, and avoiding penalties.

The IRS treats cryptocurrency as property, not currency, which means every crypto transaction creates a taxable event that must be reported. By April 15, 2025, any U.S. taxpayer who traded, received, or profited from digital assets during 2024 must report these transactions, regardless of the amount involved.

Short-term capital gains apply to assets held for one year or less, with tax rates reaching up to 37% based on your income level. Long-term capital gains apply to assets held longer than one year, with more favorable rates ranging from 0% to 20%.

Income from mining, staking, airdrops, and payments received in cryptocurrency is taxed as ordinary income at rates ranging from 10% to 37%. This income must be reported at its fair market value when received.

Key Tax Changes for 2025

Starting January 1, 2025, the IRS requires all U.S. taxpayers to track the cost basis of cryptocurrency on a wallet-by-wallet basis, rather than using a universal method across all accounts. This represents a significant shift in how crypto taxes are calculated.

Cryptocurrency brokers must report users' digital asset sales to the IRS via Form 1099-DA starting in 2025. For tax year 2025, this form will report gross proceeds from crypto sales, and beginning in 2026, brokers must also include cost basis information.

Exchanges like Coinbase, Binance.US, Kraken, and Gemini will automatically send you Form 1099-DA for your transactions. However, this doesn't eliminate your responsibility to maintain accurate records and calculate your own taxes correctly.

What CoinTracking Is and Why You Need It

CoinTracking is a cryptocurrency portfolio management and tax reporting platform that seamlessly imports data from 300+ exchanges, blockchains, and wallets. Founded in 2012, it's the world's first crypto tax reporting tool, currently serving over 1.4 million users.

The platform solves the primary challenge of crypto taxation: tracking cost basis across multiple wallets, exchanges, and thousands of transactions. Without proper software, manually calculating gains and losses for even a moderately active trader becomes nearly impossible.

CoinTracking supports the entire spectrum of crypto activities, including coins, NFTs, staking, liquidity pools, and DeFi protocols. It can track over 27,500 digital assets and generate tax reports compliant with IRS requirements, including Form 8949 and Schedule D.

Understanding Tax Calculation Methods

The IRS accepts several cost basis identification methods, including FIFO (First In, First Out), LIFO (Last In, First Out), and HIFO (Highest In, First Out). Starting in 2026, FIFO will become mandatory, but for the 2024 and 2025 tax years, you can choose your preferred method.

FIFO: Assumes the earliest purchased coins are sold first. If you bought Bitcoin at $30,000 in 2023 and $60,000 in 2024, selling Bitcoin under FIFO uses the $30,000 basis first, resulting in higher gains if current prices are elevated.

LIFO: Assumes the most recently purchased coins are sold first. Using the same example, LIFO would use the $60,000 basis, potentially reducing taxable gains.

HIFO: Identifies the highest cost basis coins as sold first, minimizing capital gains by matching sales with the most expensive purchases.

CoinTracking supports 13 tax calculation methods, including FIFO, LIFO, and AVCO (Average Cost Basis), ensuring compliance with diverse international tax regulations.

Once you select a method, use it consistently. Switching methods between tax years without IRS approval can trigger audits and penalties.

CoinTracking Pricing Plans

CoinTracking offers a free version for casual traders supporting up to 200 transactions. This includes portfolio tracking features and the ability to download tax forms.

The paid plans are structured by transaction volume:

Pro Plan: $9.99 per month (or approximately $120 annually) supports up to 3,500 transactions, includes 20MB CSV file imports, and provides API integration for automatic data syncing.

Expert Plans: Range from $203 to $329 annually, depending on transaction volume needs, supporting between 20,000 and 100,000 transactions.

Unlimited Plan: Designed for high-volume traders, businesses, and tax professionals with no transaction limits. This plan can handle accounts with millions of transactions.

Users can save money by purchasing two-year packages at discounted rates. Unlike some competitors that charge separately for each tax year, CoinTracking allows you to use the service for any tax year you want when you purchase an annual plan.

Setting Up Your CoinTracking Account

Creating an account requires minimal information. Visit cointracking.info and click the Login/Register button. You need only a username and a password. Email is optional but recommended for account recovery and two-factor authentication.

CoinTracking lets you use features completely anonymously with no personal data required. This privacy-focused approach appeals to users concerned about data security.

After registration, select your main currency and time zone. The platform defaults to showing your dashboard in your local currency, though this can be changed later. You'll see an empty dashboard initially since no transaction data has been imported yet.

Importing Your Crypto Transactions

CoinTracking offers three methods for importing transactions: manual entry, CSV file uploads, and automatic API imports.

API Import Method

Automatic API imports from exchanges and wallets are available on Pro and Unlimited accounts, providing the most efficient way to sync your trading data.

To set up API imports:

• Navigate to Enter Coins, then select Exchange Imports (API). Choose your exchange from the list of 300+ supported platforms. Log in to your exchange account and locate the API settings, typically found under Settings or Security.
• Create a new API key. Configure read-only permissions to ensure CoinTracking can only import transaction data and cannot execute trades or withdraw funds on your behalf.
• Copy the API key and API secret (sometimes called private key). Paste these credentials into the corresponding fields in CoinTracking. The platform will automatically begin importing your transaction history.
• CoinTracking's system periodically checks your trades and automatically updates your account, with an average import duration between 1 and 3 minutes, depending on the exchange.

For exchanges like Binance, you must enable two-factor authentication before creating API keys. For Coinbase, select all accounts you want to monitor and enable all read permission checkboxes. Do not whitelist IP addresses when setting up Coinbase API imports.

CSV File Upload Method

Free plan users must use CSV imports since API access is restricted to paid accounts. This method also works when an exchange doesn't offer API access or for legacy exchanges no longer operational.

Download your transaction history as a CSV file from your exchange. Each platform has its own export process, typically found under Account History, Transaction History, or Reports.

In CoinTracking, navigate to Enter Coins and select CSV Import. Choose your exchange from the dropdown menu. Upload your CSV file, and the platform will automatically format and import the data. Before enabling API imports, delete any previously uploaded CSV data from the same exchange to prevent duplicate entries.

Manual Entry Method

Manual entry is useful for ICO purchases, private transactions, or any trades not captured by exchange imports. Click Enter Coins, then select the Manual Entry tab.

Provide the following information: number of coins purchased, buy currency, price per unit, sell currency (what you paid with), trading fees if applicable, and exact date and time of the transaction. For example, if you bought 2 Bitcoin for $50,000 total on June 15, 2024, with a $25 fee, you would enter: Buy 2 BTC, Sell $50,000 USD, Fee $25 USD, Date 06/15/2024.

Click Add to save the transaction. You can edit or delete entries directly from the transaction table by clicking on individual cells or selecting multiple rows.

Organizing Your Transaction Data

After importing transactions, review your data for accuracy. CoinTracking provides several tools to validate your information.

Checking for Missing Transactions

Navigate to Reporting, then select Missing Transactions. This report identifies gaps in your transaction history by comparing wallet balances with recorded deposits and withdrawals. If you moved 1 BTC from Coinbase to a hardware wallet but only have the withdrawal recorded, this report flags the missing deposit.

Identifying Duplicates

Go to Reporting and select Duplicate Transactions. This shows identical entries that may have been imported multiple times from different sources. Remove duplicates to ensure accurate tax calculations.

Balance Validation

Account Validation helps quickly identify and fix inconsistencies in your data by comparing imported balances with actual exchange balances.

Access this under Reporting. The system compares your CoinTracking balance for each coin against the actual balance on connected exchanges. Discrepancies indicate missing transactions or import errors that need correction.

How to Generate Your Tax Report With CoinTracking

Navigate to Tax Report from the main menu. Click the red button labeled “Open settings and create a new Tax Report.”

Configure your report settings:

Tax Year: Select 2024 for your 2025 tax filing.

Accounting Method: Choose your cost basis method (FIFO, LIFO, etc.).

Tax Rates: Enter your short-term capital gains rate based on your ordinary income tax bracket (10%-37%) and your long-term capital gains rate based on your income level (0%, 15%, or 20%).

Country: Select United States to ensure compliance with IRS requirements.

Click Generate Report. CoinTracking generates comprehensive tax reports, including realized and unrealized gains, short- and long-term holdings, and audit trails.

The platform generates Form 8949 data showing each individual transaction with purchase date, sale date, proceeds, cost basis, and gain or loss. This information transfers to Schedule D for your Form 1040.

Exporting Data for Tax Filing

CoinTracking allows export of tax reports in multiple formats, including CSV, PDF, XLS, XML, and JSON. The platform integrates directly with popular tax software.

For TurboTax users, export the report in TurboTax format. The file contains all necessary transaction data formatted for easy import into TurboTax Premier or Self-Employed editions.

For TaxACT or Drake software, select the appropriate export format. CoinTracking formats the data to match each program's import specifications.

If filing manually or working with a CPA, export as PDF for a readable summary and CSV for detailed transaction listings. The PDF provides a comprehensive overview, while the CSV gives your tax professional the granular data needed for precise calculations.

Handling Complex Transactions With CoinTracking

Staking and Mining Income

Cryptocurrency earned through mining or staking is classified as ordinary income at standard income tax rates. Record the fair market value in USD when you receive the coins.

CoinTracking automatically categorizes staking rewards and mining payouts as income transactions. The platform calculates the USD value at the time of receipt, which becomes your cost basis for that coin. When you later sell these coins, you calculate capital gains based on this initial income value.

DeFi and Liquidity Pools

DeFi transactions create complex tax scenarios. Providing liquidity typically involves depositing two tokens into a pool and receiving LP tokens in return. This constitutes two disposals subject to capital gains tax.

Rewards from liquidity pools count as ordinary income when received. CoinTracking tracks these transactions and properly categorizes them, but you must ensure all DeFi interactions are imported, either via API if supported or manually.

NFT Transactions

NFTs are treated as collectibles and subject to a maximum capital gains rate of 28%, higher than the standard long-term capital gains rates.

When you purchase an NFT, record the transaction, including gas fees paid. The purchase price plus gas fees becomes your cost basis. When selling, the proceeds minus the cost basis determine your gain or loss.

CoinTracking supports NFT tracking, but you must manually categorize certain transactions to ensure proper 28% tax treatment rather than standard capital gains rates.

Common Mistakes and How to Avoid Them

Incomplete Transaction History: Missing even a few transactions throws off all subsequent calculations. Import data from every wallet and exchange you've used, including inactive accounts.

Ignoring Gas Fees: Ethereum gas fees and similar network costs adjust your cost basis. CoinTracking tracks fees automatically when imported via API, but manually entered transactions require you to include this information.

Wallet-to-Wallet Transfers: Moving cryptocurrency between your own wallets isn't taxable, but you must record these transfers correctly. Transferring crypto between personal wallets is not a taxable event, but failing to track the movement can make it appear you have missing transactions.

Forgetting About Airdrops: Tokens received through airdrops count as ordinary income at their fair market value when received. Many traders forget to report these, creating audit risks.

Not Reporting Losses: You can offset up to $3,000 in capital losses against ordinary income annually, and carry forward unused losses to future years. Reporting losses reduces your tax liability and creates tax benefits for subsequent years.

The New Wallet-by-Wallet Tracking Rule

Starting January 1, 2025, taxpayers must track each wallet and exchange separately, similar to how stockbrokers track shares in different brokerage accounts. You can no longer aggregate cost basis across all accounts. This change significantly impacts tax calculations. If you bought Bitcoin at different prices in different wallets, you must now track which specific wallet's Bitcoin you're selling.

The IRS provides safe harbor rules to help with the transition. You can allocate your existing holdings to specific wallets using either:

Specific Unit Allocation: Assign your existing crypto holdings to specific wallets matching where they're actually held on January 1, 2025, identifying particular coins bought on specific dates at specific prices. This must be completed before making any sales in 2025.

Global Allocation: Apply a consistent rule across all holdings, such as assigning the earliest purchases to one wallet and later purchases to another. This method allows until your 2025 tax return deadline, but requires a uniform application.

Make sure your crypto tax calculator software is updated for these wallet-by-wallet tracking rules. CoinTracking has implemented these changes for the 2025 tax year.

Working with Tax Professionals Via CoinTracking

For complex situations involving high transaction volumes, DeFi protocols, or significant gains, consider working with a crypto-specialized CPA. CoinTracking maintains a directory of tax professionals familiar with the platform.

CoinTracking cooperates with tax professionals who are familiar with the software, with 481 CPAs from 95 countries listed in their database.

You can share your CoinTracking account access with your tax professional, allowing them to review your transactions, validate data accuracy, and generate reports. This collaboration ensures nothing gets missed while leveraging professional expertise for complicated scenarios.

CoinTracking also offers a Full-Service option where crypto tax experts handle your entire tax preparation. This service includes importing transactions, reviewing data accuracy, reconciling discrepancies, and generating final tax reports ready for filing.

Security and Privacy Considerations

CoinTracking uses ISO/IEC 27001 certified security processes, including regular audits and SSL encryption for all data transmission. API keys are stored securely in AWS vaults.

Always use read-only API keys when connecting to exchanges. Never grant write permissions that would allow transaction execution or fund withdrawals. Enable two-factor authentication on both your CoinTracking account and all connected exchanges.

The platform allows users to create complete backups of their portfolio to avoid accidental data loss or corruption. Export your data regularly as a precaution against technical issues.

Conclusion

Cryptocurrency tax regulations continue evolving. The OECD's Crypto-Asset Reporting Framework promotes international tax compliance, with exchanges required to report user transactions to tax authorities, taking effect January 1, 2026.

Stay informed about regulatory changes affecting crypto taxation. CoinTracking updates its platform to reflect new IRS requirements, ensuring your tax calculations remain compliant as rules change. Maintain meticulous records throughout the year rather than scrambling during tax season. Enable automatic API imports so transactions are continuously tracked without manual intervention.

Cryptocurrency taxation is complex, but tools like CoinTracking make compliance manageable. By accurately tracking transactions, using proper cost basis methods, and generating compliant reports, you can confidently file your crypto taxes while minimizing your tax liability through legal strategies like tax loss harvesting and proper classification of long-term holdings.