How to Keep Records for Tax
Eight fields, recorded at the time, ten seconds each. It is the most boring habit in this subject and the one an accountant will thank you for.
What this covers
Tax rules differ by country and change. What does not change is that calculating what you owe requires knowing what you did, and reconstructing that later is considerably harder than recording it at the time.
The eight fields
| Field | Why it is needed |
|---|---|
| Date and time | Determines the tax year and how long you held |
| Type | Buy, sell, swap, transfer, reward, fee |
| Asset out and amount | What left |
| Asset in and amount | What arrived |
| Value in your currency at that moment | Almost always how gains are measured |
| Fee | Usually adjusts the cost or the proceeds |
| Platform | For reconciling against statements later |
| Note | Anything your future self will not remember |
One row per transaction, filled in when it happens.
The field that cannot be reconstructed
The value in your own currency at that moment.
If you swapped one asset for another, you need what both were worth in your currency at that exact time. Finding historical prices for a specific timestamp later is possible and tedious, and for some pairs the data is poor.
Recording it takes five seconds. Reconstructing it takes ten minutes per transaction.
What people forget to record
Transfers between your own wallets. Usually not taxable, and without a record they look like a sale followed by a purchase, and proving otherwise is your job.
Swaps. In most jurisdictions, exchanging one asset for another is a disposal and an acquisition, even though no cash was involved.
Rewards. Staking rewards and airdrops are frequently income at the moment received, valued that day. Small amounts arriving frequently are easy to overlook and they add up.
Fees paid in crypto. A fee paid in an appreciated asset can itself be a disposal.
The tools question
Portfolio trackers import from exchanges and produce tax reports. Several are good.
Use one alongside your own record rather than instead of it. Imports are occasionally wrong, and the only way to notice is having something to compare against.
The habit that makes it work
Record immediately. Not weekly, not in batches.
The system fails the moment it becomes a task rather than a reflex, which is why ten seconds at the time beats an hour at the weekend.
The thing that makes it easier
Keeping activity on one platform means one complete downloadable history to reconcile against, rather than assembling from several with different formats.
Venues publishing a full transaction export, such as a regulated exchange such as Collect & Exchange, make the annual reconciliation a short job. Platforms with incomplete exports leave the gap for you to fill from memory.
The advice that actually matters
Set aside the estimated tax when you realise a gain, in the currency you will pay it in.
People who leave it in crypto and then face a bill after a decline are a recurring and entirely avoidable story.