Celsius Network Tax Reporting - How to Do Your Crypto Taxes
Celsius Network has become one of the largest players in the crypto loan origination space. With over $4 billion in loans originated, many crypto users are choosing to store their crypto with the Celsius platform to earn a generous interest rate on their crypto deposits. Just like any other form of interest, the interest received from your crypto holdings is a form of taxable income. This blog post explains how you can report the interest received from your Celsius account on your taxes.
Crypto Taxes 101 - How does it all work?
In most countries, cryptocurrencies like bitcoin are treated as property for tax purposes, not as currency. Just like other forms of property—stocks, bonds, real estate—you incur a tax reporting requirement when you sell, trade, or otherwise dispose of your cryptocurrency for more or less than you acquired it for.
In this sense, cryptocurrency trading looks similar to trading stocks for tax purposes.
For example, if you purchased 0.2 Bitcoin for $2,000 in May of 2018 and then sold it two months later for $3,000, you have a $1,000 capital gain. You report this gain on your tax return, and depending on what tax bracket you fall under, you pay a certain percentage of tax on the gain. Rates fluctuate based on your tax bracket as well as depending on whether it was a short term vs. a long term gain. This applies for all cryptocurrencies.
In addition to selling and trading, you also incur a tax liability when you earn cryptocurrencies as a form of income—like interest income received from your Celsius deposits.
For example, if you deposit 1 BTC in your Celsius account and earn 0.05 BTC in interest over the year, that interest needs to be reported as income on your taxes. The amount of income reported will be the fair market value of the interest in US Dollar terms (or whatever your home fiat currency is). If that 0.05 BTC was worth $400 at the time you received it, that’s how much income you would recognize on your taxes.
We discuss the fundamentals of crypto taxes in more depth within our blog post, The Complete Guide to Cryptocurrency Taxes.
Celsius Tax Reporting
If you have an account with Celsius, you need to be reporting various events on your taxes. These events include income received from interest accounts, income received from referral rewards, crypto received from Celsius “Bonus Tokens”, and interest paid when taking out a loan. Don’t worry - CryptoTrader.Tax automatically handles this reporting for you!
The key is to be recognizing the income you are receiving from Celsius in its associated US Dollar amounts. Seeing that much of this interest is paid out in crypto, associating each payout with its US dollar fair market value can be a tedious task. You can automate this reporting with crypto tax software.
Automating Celsius Tax Reporting with CryptoTrader.Tax
You can automate the process for reporting the income associated with your Celsius account with cryptocurrency tax software, CryptoTrader.Tax.
Simply download your transaction history file from the Celsius app. This file contains records for all of the transactions that occurred on your Celsius account.
This Celsius Transaction History file can be imported directly into your CryptoTrader.Tax account (you don’t need to edit it at all).
CryptoTrader.Tax will do the leg work and sift through this file to import all necessary information for your tax reporting. The historical fair market value prices for each of your crypto interest payments are retrieved automatically.
CryptoTrader.Tax provides you with a full Income Report included with your final tax report. This report details all of your crypto income earned across all platforms to make it easy to report on your taxes.
What if I sent the crypto interest I earned to other platforms to sell or trade?
Because cryptocurrency is so transferable, it’s common for users to send the crypto that they earn in interest to other platforms to sell, trade, or buy other cryptocurrencies.
Reporting and detecting these actions is no problem for CryptoTrader.Tax. Once you’ve imported your Celsius transaction history file, CryptoTrader.Tax saves your cost basis information for each received cryptocurrency. Now, when you sell or trade the crypto you earned from Celsius, the app automatically calculates the associated capital gain or loss and includes it within your tax reports.
DeFi Tax Reporting
DeFi has exploded in popularity over the past year. We analyze how yield farming, interest, lending, and liquidity pools are treated from a tax perspective in our complete DeFi Tax Guide.
Have any questions about crypto tax reporting?
We have a team of experts here at CryptoTrader.Tax. Simply reach out to us via live chat or hit us up on Twitter @CryptoTraderTax with any questions! We’re always happy to help out.
For more information on the tax implications of crypto loans, margin trading, and DeFi, checkout our complete blog: Crypto loans, margin trading, and DeFi Tax Implications.
Disclaimer - This post is for informational purposes only and should not be construed as tax or investment advice. Please speak to your own tax expert, CPA or tax attorney on how you should treat taxation of digital currencies.