Wondering how to report your OpenSea taxes?
This year, OpenSea saw billions of dollars of transaction volume. While thousands of NFT creators and traders realized hefty profits while using the platform, many are unsure how to report this income on their tax returns.
In this guide, we’ll break down what investors need to know about how NFTs on OpenSea are taxed (and share a simple step-by-step process for reporting NFT transactions on your tax return).
OpenSea is the oldest and largest marketplace for NFT’s and other crypto-collectibles. OpenSea was founded in 2017 by Devin Finzer and Alex Atallah, who envisioned a future where blockchain technology would enable unique ownership of any physical or digital product.
Today, OpenSea’s interface makes it easy to find and trade user-owned digital products. As a result, demand is growing at unprecedented rates. In August 2021, OpenSea recorded a stunning $3.4 billion in transaction volume.
NFTs are considered property and are taxed similarly to other crypto-assets.
When you buy an NFT with a cryptocurrency such as Ethereum, you will incur capital gains or capital losses depending on how the price of your crypto has appreciated since you originally received it.
When you sell an NFT, you will incur capital gains or capital losses depending on how the price of your NFT has fluctuated since you originally received it.
If you mint an NFT, you will need to report proceeds from primary and secondary sales as ordinary income.
For more information, check out our guide to NFT taxes.
Because of the complexities of NFT taxes, it’s difficult for any NFT marketplace to generate complete tax records.
For example, imagine buying an NFT on OpenSea with Ethereum. How much you incur in capital gains depends on the original purchase price of your ETH. Unfortunately, NFT marketplaces like OpenSea do not have access to this information and therefore cannot help you calculate your capital gains.
Trying to sort through your crypto transactions on multiple wallets and exchanges can feel stressful. CryptoTrader.Tax can help.
With CryptoTrader.Tax, you can automatically import your crypto transactions from platforms like Coinbase and Kraken. Once your transaction data is uploaded, you can file your tax return with the click of a button.