Disclaimer: Note that the following should not be construed as legal, tax, audit, accounting, or brokerage advice and that any and all information is provided for informational purposes only.
Users with an Ultra plan can now specify their cost basis method by each individual tax year. This feature is optimized for users that:
- Would like to utilize a specific cost basis method for their current or future years without altering previous tax calculations. As an example, if you have historically used Highest-in, First-out (HIFO) for all of your previous tax years and would like to see the tax implications of First-in, First-out (FIFO) for your current tax year. You will be able to specify the current tax year as FIFO without applying the FIFO cost basis method to past tax years.
- Would like to optimize your tax treatment based on your situation or preference for specific tax years. As an example, if you have historically used Highest-in, First-out (HIFO) for all of your previous tax years and verify that utilizing Last-in, First-out (LIFO) for your current tax year will be more beneficial for their tax summary, your are able to specify your cost basis method based on your preference.
Note: This feature is currently available to CoinTracker Ultra plan users, upgrade to the Ultra plan here to gain access to this feature!
Setting cost basis method by year
Access the Settings Page:
- Navigate to the settings page within your CoinTracker account by clicking on the ‘Settings’ tab, found in the top-right menu.
Locate the Tax Section:
- Within the settings, locate the section labeled ‘Tax’. This section contains various tax-related settings and preferences for your account.
Select Cost Basis Method:
- Under the ‘Tax’ section, select the ‘Cost basis method’ option. Once selected a modal will appear, you will see a list of tax years starting with the most recent year at the top. Each year has an associated cost basis method indicated next to it (e.g., HIFO - Highest In First Out). If you wish to change the cost basis method for a specific tax year, click on the current method displayed (e.g., HIFO).
- Note: CoinTracker initiates your cost basis method to HIFO by default, see our cost basis method article for more information.
Choose the Desired Method:
- After clicking on the current cost basis method, a selection menu will appear, allowing you to choose a different cost basis method. CoinTracker may offer various methods such as FIFO (First In First Out) and LIFO (Last In First Out)..
Confirm Your Selection:
- Once you have selected the desired cost basis method, confirm your choice. You may now select ‘Save settings’ to finalize your selection.
Repeat for Other Years (If Necessary):
- If you wish to specify different cost basis methods for other tax years, repeat steps 3 to 5 for each year you want to update.
Review and Save Settings:
- After you’ve made all the desired changes, ensure to review your settings. Verify that your preferences are updated in the selection menu.
Understand the Implications:
- Be aware that changing your cost basis method can have significant implications on your tax reporting. It is advisable to consult with a tax professional before making any changes to ensure that you understand the impact on your tax liabilities.
By following these steps, you can effectively specify and update your cost basis method by tax year within the CoinTracker product to align with your tax reporting preferences and requirements.