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How to do your Metamask taxes in 2022
| Transaction type | Automatic Import |
|---|---|
| Withdrawals | |
| Deposits | |
| Tokens (e.g. ERC20) | |
| NFTs (e.g. ERC721) | |
| Swaps |
This article aims to help people that used Metamask understand how to get started calculating their crypto taxes. For best results it should be complemented with a crypto tax guide relevant to your country.
Introduction to Metamask
Metamask is created by a group of developers and designers from across the world that focus on providing democratic access to the decentralized web. MetaMask allows users to store and manage account keys, broadcast transactions, send and receive Ethereum-based cryptocurrencies and tokens, and securely connect to decentralized applications through a compatible web browser or the mobile app's built-in browser
MetaMask also lets the user create and manage their own identities (via private keys, local client wallet and hardware wallets like Trezor™), so when a users wants to perform a transaction and write to the blockchain, they get a secure interface to review the transaction, before approving or rejecting it.
Metamask currently offers support for multiple networks that are EVM (Ethereum Virtual Machine) compatible. This includes networks like Ethereum, Avalanche, Polygon, and Binance Smart Chain. You can also use Metamask to access test networks like the Rinkeby Network, Avalanche Network, Kovan Network, Goerli Network, and Ropsten Network. These are all Ethereum testing networks to evaluate and testing blockchain developments, they are not required when filing your taxes.
Do I need to pay taxes when using Metamask?
Metamask is used for a wide variety of reasons including but not limited to interacting with Decentralized Applications (smart contracts), NFTs, trading, and storage. This can make transactions in Metamask harder to classify when doing your taxes. Depending on your country, a lot of these transactions can be considered to be tax events. It is important to have a good understanding of what each transaction represents. You can find more detailed information by looking up your public addresses on a blockchain explorer if you happen to forget.
When evaluating a transaction feel free to use Divly's crypto tax guides. Each country and local tax authority has its own rules on how transactions should be taxed. If you are using Divly, then we do attempt to match more complex decentralized trades automatically for you. This includes NFTs. Divly will also use tax logic suitable to your country.
How to export your Metamask transaction history
Metamask does not have a native export function. This means you can’t download your transaction history from Metamask, rather you need to use a blockchain explorer like Etherscan. You can download a file from Etherscan, Bscscan, Polygonscan or other blockchain explorers. If you are a developer you can use their API to automatically export the data.
Automatic import
Divly has simplified the process by building an automatic integration with multiple blockchain explorers for our users. By simply providing Divly with a wallet address (0x…), all your transactions including the native tokens will be imported automatically.
Step by step guide:
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To locate your Wallet Address, sign into the Metamask browser extension.
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Select the correct network and account. Copy the Wallet Address provided on the top under the account name. The Wallet Address should start with “0x”.
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In Divly, paste the copied Wallet Address and select the relevant blockchain to begin importing your transactions.
Metamask transaction types
We have categorized Metamask transactions and their available export method in the below table. We have also provided information about how these transactions are handled when imported into Divly for relevant users.
| Transaction type | Automatic Import |
|---|---|
| Withdrawals | |
| Deposits | |
| Tokens (e.g. ERC20) | |
| NFTs (e.g. ERC721) | |
| Swaps |
Withdrawals
Withdrawals refer to crypto transactions sent out of a Metamask account. If you sent your crypto to another crypto wallet you own, make sure it is matched as a Transfer to avoid it being treated as a sale. If the withdrawal refers to a P2P trade, gift, buying goods/services, or another transaction type, please label it accordingly when using Divly. The transaction type applied can affect your taxes.
Deposits
Deposits refer to crypto transactions being sent to your Metamask account. If you received crypto from another crypto wallet you own, make sure it is matched as a Transfer to avoid it being treated as a purchase. If the deposit refers to a received gift, mining income, or another transaction type, please label it accordingly when using Divly. The transaction type applied can affect your taxes.
Tokens (e.g. ERC20)
Tokens are handled in the same way as cryptocurrencies like Ethereum or Bitcoin. "ERC20" refers to a scripting standard used within the Ethereum blockchain which stands for technical standards that dictate a number of rules and actions that an Ethereum token or smart contract must follow and steps to be able to implement it. ERC20 is essentially a set of basic guidelines and functions that any new token created in the Ethereum network must follow. ERC stands for "Ethereum request for comment," and the ERC20 standard was implemented in 2015.Each chain will have their own standard, for example Binance Chain uses the BEP20 standard. All of these tokens are supported by Divly.
NFTs (e.g. ERC721)
Non-Fungible tokens (NFTs) allow developers to tokenize ownership of any arbitrary data, drastically increasing the design space of what can be represented as a token on the blockchain. In the ERC20 token standard, developers can create any number of tokens within one contract, but in the ERC721 token standard, each token within the contract holds a different value. How NFTs are taxed can depend on whether you purchased the NFT or created the NFT and sold it as income. See your country guide for more information.
Swaps
In cryptocurrency, a “Swap” refers to exchanging one cryptocurrency you hold for the equivalent value of another cryptocurrency. Instead, the trade is cryptocurrencies. During a Swap, you pay with an alternative cryptocurrency different (other) than the crypto you will purchase. This is often done using a Liquidity Pool like Uniswap or Pancakeswap. Swaps are treated in the same way as a typical trade in most countries.
Common issues when calculating your Metamask taxes
When importing transactions from Metamask, understanding them can sometimes be complex or confusing. Below are common happenings that require some extra attention:
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Decentralized trades can sometimes include three or more cryptocurrencies in the same transaction, making it risky for Divly to match the correct value of each traded token. For example, a user may use PancakeSwap to exchange 1 BNB for five different tokens in the same trade. This makes it hard for Divly to understand how much of the 1 BNB was technically traded for each token. In these cases they are imported as deposits and withdrawals. The tax effect is the same as if it were a trade, excluding transaction fee deduction. You can choose to manually split the trades up or leave it as is.
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Smaller obscure tokens imported may have the same currency abbreviation as another larger more common cryptocurrency. For example, the currency abbreviation BIT is shared with multiple cryptocurrencies. Divly uses the pricing information for the largest one which may not correspond to the token you used. To fix this change the Value in local currency on the affected transactions.
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Smaller obscure tokens are often hard to find pricing data for. When importing these tokens, expect to have to manually edit pricing in Divly. This will be made evident with the Missing Price Information warning, so they will be easy to locate and fix.
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It is common for users to have tokens airdropped to their Metamask accounts without their knowledge. These will be imported as Deposits in Divly and for your own sake are worth labeling as Airdrop. Assuming you have not sold or traded them, airdrops will not affect your tax outcome.
If you have any issues with calculating your Metamask taxes, feel free to contact our support team which is available via the online chat on the bottom right hand corner of our website. Good luck!
Any tax-related information provided by us is not tax advice, financial advice, accounting advice, or legal advice and cannot be used by you or any other party for the purpose of avoiding tax penalties. You should seek the advice of a tax professional regarding your particular circumstances. We make no claims, promises, or warranties about the accuracy of the information provided herein. Everything included herein is our opinion and not a statement of fact. This article may contain affiliate links.