If you’re using Kraken to trade cryptocurrency, you need to report that activity on your taxes.
Unfortunately, this can be challenging due to the transferable nature of cryptocurrencies.
Luckily, Kraken customers can still stay compliant with IRS guidelines — provided they take the right steps to stay on top of their transactions. Let’s break down how you can accurately report all of your Kraken transactions to the IRS.
Originally founded in 2011, Kraken is one of the largest US-based cryptocurrency exchanges. In 2021, it was estimated that Kraken had more than 6 million users and was the fifth-largest exchange in the world by transaction volume.
To do your cryptocurrency taxes, you need to calculate your gains, losses, and income from your cryptocurrency investments in your home fiat currency (e.g. US Dollar, Australian Dollar, etc.).
To do this, you’ll need data on all of the cryptocurrency transactions you’ve been involved with on Kraken and on any other exchange you’ve interacted with.
Once you have your calculations, you can fill out the necessary tax forms required by your country. If you’re based in the United States, you can learn which forms you need to fill out in our blog post: How to Report Cryptocurrency On Your Taxes.
Yes. Kraken sends data on users with more than $20,000 in transaction volume to the IRS. In the future, Kraken will also be sending out 1099’s that report on your cryptocurrency transactions to the IRS as a result of the U.S. infrastructure bill.
There’s a reason why Kraken and other cryptocurrency exchanges struggle to provide full tax reporting for their customers.
Many cryptocurrency investors use additional exchanges, wallets, and platforms outside of Kraken. In addition to trading on Kraken, they may conduct additional trades on other exchanges or use self-custodied wallets.
Kraken’s reporting can only extend as far as the Kraken platform. If you use additional cryptocurrency wallets, exchanges, DeFi protocols, or other platforms, Kraken can't provide complete gains, losses, and income tax information.
That’s why we recommend using CoinLedger. The software can integrate with all of your exchanges and wallet providers to track your crypto transactions across Kraken and any other platform you may be using.
There are two methods you can use to connect your Kraken account with CoinLedger: manual and automatic. Let’s go through both methods.
You can manually upload your transactions to CoinLedger with your Kraken transaction history csv file.
1. Sign in to Kraken.
2. Click History on the top navigation, then click Export.
3. Select Ledgers in the dropdown under “Export Data”.
4. In the time period, select when you first opened your Kraken account to the present.
5. Click submit, then download the file.
6. Kraken will give you a ledgers.zip file by default. Unzip that file so you have the .csv that is inside.
7. Upload the csv file into CoinLedger.
Alternatively, you can integrate your Kraken account directly with CoinLedger to ensure that new trades are recorded automatically. First, you’ll need to create an API key to your Kraken account.
1. Log in to your Kraken account.
2. Click on your username on the top right corner.
3. Click on “Security”, then API.
4. Click “Add key”.
5. Enable the following permissions.
6. Click Save. Remember to save your API key in a secure location!
7. Navigate to the Kraken tab inside CoinLedger and enter your API Key and API Secret.
With these permissions, CoinLedger won’t be able to make any changes to your account. It will only pull the information needed to properly report your taxes.
You’ll need to follow this same process with any other exchange or wallet you’re using. Check out our full list of integrations to find out how to connect your other platforms.
Once you’ve recorded all of your relevant transactions, your crypto tax forms will be ready for download. You can file them yourself, send them to your tax professional, or import them into your preferred tax filing software like TurboTax or TaxAct.
By integrating with your crypto exchanges and wallets and consolidating your data, CoinLedger is able to track your profits, losses, and income and generate accurate tax reports in a matter of minutes.
You can test out the software and generate a preview of your gains and losses completely for free!