Trying to report your QuickSwap transactions to the IRS?
Reporting taxes on cryptocurrency transactions can be difficult, especially if you’ve used multiple exchanges and wallets during the tax year.
In this guide, we’ll break down everything you need to know about how your transactions on QuickSwap are taxed. We’ll also walk through a step-by-step process on how to report your QuickSwap transactions to the IRS.
QuickSwap is a decentralized exchange that runs on the Polygon network. Unlike traditional exchanges that rely on a centralized market marker, QuickSwap receives liquidity pools from thousands of incentivized providers.
The Polygon network is a layer 2 built on the Ethereum blockchain that offers faster transactions and lower fees. For this reason, investors will often bridge their Ethereum and ERC-20 tokens to Polygon, and then trade them on QuickSwap.
At this time, decentralized exchanges like QuickSwap do not report to the IRS.
However, it’s important to remember that transactions on blockchains like Polygon are publicly visible. In the past, the IRS has worked with contractors like Chainalysis to analyze the blockchain and crack down on tax fraud.
The IRS has not given clear guidance on how DeFi protocols like QuickSwap are taxed.
For the most part, tax professionals rely on existing guidance on cryptocurrency taxes to determine how DeFi transactions are taxed. At a high level, earning cryptocurrency is considered income while disposing of cryptocurrency is subject to capital gains and losses.
Unfortunately, the taxability of specific DeFi transactions such as providing liquidity to a liquidity pool is a relatively gray area that government and tax authorities haven’t explicitly ruled on.
The conservative approach is to treat adding crypto to a liquidity pool as a taxable crypto-to-crypto swap. A more aggressive approach is to treat this as a non-taxable deposit.
For more information, check out our comprehensive guide to DeFi taxes.
At this time, it’s unclear how the IRS will treat bridging ERC-20 assets to the Polygon blockchain.
The conservative approach is to treat this as a taxable crypto-to-crypto swap.
A more aggressive approach is to treat bridging as equivalent to holding the same asset. This would be considered a non-taxable event.
For more information, read our complete guide on how cryptocurrency bridging is taxed.
Reporting your cryptocurrency taxes can be difficult, especially if you’ve transferred your cryptocurrency between different wallets. In this case, you may have trouble tracking your cost basis and determining your capital gains and losses.
One way to simplify the process is to use crypto tax software like CoinLedger. CoinLedger automatically integrates with the Polygon blockchain, helping you report your taxes in minutes.
Here’s how you can report your QuickSwap taxes in minutes.
1. Create a free CoinLedger account
2. Add your public Polygon wallet address to CoinLedger. This will automatically import all your relevant transactions — including those from QuickSwap!
And that’s it! Once you’ve connected your other wallets and exchanges, you can generate a comprehensive tax report with the click of a button.
Want to get started reporting your cryptocurrency taxes? Get started with CoinLedger — the platform trusted by more than 300,000 investors across the globe.