Looking to report taxes on your Cardano transactions?Â
If you’re earning staking rewards and/or buying and selling Cardano, it can be difficult to keep track of your income and capital gains.Â
In this guide, we’ll break down everything you need to know about how Cardano transactions are taxed and share what you’ll need to accurately report your taxes.Â
What is Cardano?Â
Cardano is a blockchain founded in 2017 by Charles Hoskinson, one of the co-founders of Ethereum. It is the first blockchain to use a peer-reviewed research approach to development.
The blockchain leverages Proof of Stake (PoS) technology to power the network. The ADA coin is used to power the network and help participants reach consensus.Â
Do you have to pay taxes on Cardano?Â
In the United States, Cardano and other cryptocurrencies are subject to capital gains and ordinary income tax.Â
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For more information, check out our complete guide to cryptocurrency taxes.Â
Can the IRS track Cardano transactions?Â
It’s important to remember that transactions on Cardano and other blockchains are publicly visible. In the past, the IRS has worked with contractors like Chainalysis to track transactions posted on the blockchain.Â
How are ADA staking rewards taxed?Â
Staking rewards are taxed as ordinary income based on the value of your coins at the time of receipt. If you dispose of your staking rewards, you may incur a capital gain or loss depending on how the price of your crypto has changed since you originally received it.Â
For more information, check out our guide to how staking rewards are taxed.Â
How are Cardano NFTs taxed?Â
NFTs traded on Cardano are taxed similarly to other crypto-assets.Â
When you buy an NFT with cryptocurrency, you’ll incur a capital gain or loss depending on how the price of your crypto has changed since you originally received it.Â
When you sell an NFT, you’ll incur a capital gain or loss depending on how the price of your NFT has changed since you originally received it.Â
For more information, check out our ultimate guide to NFT taxes.Â
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How is Cardano DeFi taxed?Â
While the IRS hasn’t released guidance on how DeFi transactions are taxed, we can reasonably assume the following based on previous guidance.Â
- Earning income is subject to income taxÂ
- Crypto-to-crypto swaps and other disposals are subject to capital gains taxÂ
For more information, check out our complete guide to DeFi taxes.Â
What records should I keep for my taxes?Â
Want to track your Cardano transactions for tax purposes? You’ll need the following information.Â
- The type of cryptocurrencyÂ
- The amount of cryptocurrencyÂ
- The date you received your cryptocurrencyÂ
- The price of your crypto at receipt
- The date you disposed of your cryptocurrency
- The price of your crypto at disposalÂ
Tracking this information can be difficult, especially if you’re using multiple wallets and exchanges. Many investors use crypto tax software to record their transactions and save hours of time and effort during tax season.Â
Frequently asked questions
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