If you have transferred Cardano to or from your wallet, received staking rewards, swapped ADA for other tokens or NFTs, or other ways dabbled in the Cardano ecosystem, you will most likely need to report the resulting gains in your annual tax return. In this complete Cardano tax guide, we will explain everything you need to know about how to calculate and report your Cardano taxes, how Cardano NFTs are taxed, and how you can use Coinpanda to get your taxes sorted easily!
These are the topics we will address in this article:
How to do Cardano taxes
There are essentially five steps you must do to generate crypto tax reports for Cardano:
- Sign up for a free account
- Connect your Cardano wallet
- Review transactions imported
- Make manual corrections (if required)
- Export your tax forms
Next, we will look at the different steps in more detail and explain how the transactions are imported into Coinpanda.
How to connect your Cardano wallet
The first step to doing your Cardano taxes is to import the complete transaction history to Coinpanda. This step is quite easy since Coinpanda has an API integration with Cardano, so all you need to do is add your public wallet address to import all transactions. If you are not already a Coinpanda user, you can sign up for a 100% free account first.
Once your account is set up, simply go to the Wallets page, search for Cardano, and click the Cardano icon to create a new wallet.
Once the modal is open, all you need to do is select Auto-Sync, enter your public wallet address, and click Add Wallet Address.
After adding your wallet address, click the Sync button to start the import process. This can take anywhere from five seconds to 10 minutes depending on the number of transactions Coinpanda needs to import. Once completed, you will see a status message displaying the total number of transactions imported.
You might also notice that the Holdings window in the image below displays many tokens with zero value. This is both normal and expected since there are thousands of different Cardano tokens which don’t have any official market rates that can be obtained from price aggregators such as Coingecko or Coinmarketcap. We will go into more detail about how Coinpanda considers Cardano tokens and NFTs later in this guide.
Similar to Ethereum and other L1 blockchains, there is a large number of tokens on Cardano that can be either traded on centralized exchanges or swapped on a decentralized exchange (DEX) such as Sundae Swap. You might even have received some tokens in your wallet as an airdrop that you were unaware of. As discussed in the Complete Cryptocurrency Tax Guide for 2023, all transactions where a cryptocurrency is disposed of are, generally speaking, considered taxable events.
It is very important to import all transactions including Cardano tokens to a crypto tax platform like Coinpanda. Luckily, Coinpanda makes this very easy by automatically importing and identifying all token transactions! This includes both tokens sent and received, and also tokens swapped on decentralized exchanges.
The image below shows an example of two transactions imported to Coinpanda.
One challenge with Cardano tokens is that a large number of the tokens are not listed on any price aggregator site such as Coingecko. Because of this, you might see the warning Missing price data for some of your transactions, such as the example in the image above. This simply means that Coinpanda does not recognize the token and that no price data exists. To fix this, you will either need to edit the value manually or ignore the warning and leave the value as zero.
NFTs on Cardano
Non-fungible tokens (NFTs) have become hugely popular lately, and NFTs on Cardano are no exception. Marketplaces such as CNFT allow users to place bids and offers for NFTs in the Cardano ecosystem. Minting, buying, or selling NFTs are taxable events, and such transactions must therefore be accounted for when working out your total gains and losses during the tax year.
Coinpanda was one of the first crypto tax platforms to add support for NFTs in 2021 and is still today, at the time of writing this article, the only platform that fully supports NFTs on Cardano. Similar to tokens discussed in the previous section, all NFT transactions will be imported automatically from API by adding your public wallet address. This includes minting new NFTs, buying or selling NFTs on a marketplace, or NFTs sent to or from your wallet.
Coinpanda will fetch the NFT metadata during import and display the NFT image on the Transactions page. This makes it super easy to track and verify all transactions imported, and you can also see a free preview of the capital gains for every NFT transaction without upgrading your Coinpanda plan.
As seen in the image above, Coinpanda will import all NFTs bought, sold, sent, or received. If you have received an NFT from an airdrop or a free mint, the market value and cost basis will be zero since there are no official prices for NFTs except for the prior trading history. The same applies to NFTs sent – the value displayed will be zero. If a Send transaction is a disposal or otherwise a taxable event, you should change the value manually so that the resulting capital gains will be calculated correctly.
How to fix issues with NFTs not identified correctly
Unfortunately, there are some limitations with the current Cardano API, making it challenging to identify which tokens are NFTs. This means you might see an NFT not labeled correctly or normal tokens labeled as NFTs.
However, this can easily be fixed by reporting the issue to Coinpanda customer support staff, who will update this internally in our system. When updated, you will need to re-import your transactions from API, and the tokens should be identified and tracked correctly. Please follow these steps to report such issues most effectively:
- Go to the Cardano token topic in the Coinpanda community forum
- Reply to the topic and include both the token address and a link to Cardanoscan
Our support staff will then look into the specific token, make the necessary adjustments in our system, and report back when the update is completed.
Cardano staking rewards
Coinpanda will import all staking rewards received in your wallet automatically. Whichever wallet you use for staking Cardano does not change this since all transactions recorded in the blockchain will be imported.
You can see all staking rewards on the Transactions page directly. The tax report will include all staking rewards in the income summary, so you know exactly what to report in your tax return and how much you need to pay in taxes.
You can also hover over the description icon to see in which epoch the staking rewards were received.
Public keys in Cardano wallets are used for managing your individual public addresses. Instead of adding each unique address separately to Coinpanda, you can add the public key directly and thus have only a single Cardano wallet in your Coinpanda account.
Luckily, Coinpanda supports all different Cardano public key formats. Not only that, but we also support address formats from all eras including Byron. This means that whether you are using Daedalus, Yoroi, Adalite, or any other Cardano wallet, all you have to do is add your address or public key to your Coinpanda account and all transactions will be imported automatically.
For those that are not familiar with all Cardano address formats, here is an unofficial (and incomplete list) of all address formats supported today:
|Address type||Format||Is public key?|
Cardano stake keys will always start with ‘stake’, such as stake1uymh7uuay80t… for example. By adding a stake key address, Coinpanda will import all transactions associated with this address. This means that also transfers between your own public addresses derived from the same stake key will be imported. It’s therefore important that you verify all transactions imported and make sure that any transfers between your own addresses are marked as internal transfers.
Ensure accurate Cardano tax reports
Here are the most important steps you must take to ensure your Cardano tax reports are as accurate as possible:
Connect all exchanges and wallet addresses
The single most important step is to make sure you have connected all your exchange accounts and wallet addresses to Coinpanda. This is a critical step for several reasons, but the main reason is that Coinpanda needs your transactions from all exchanges and wallets to identify internal transfers and track the cost basis correctly. Without all transactions imported, Coinpanda will be unable to correctly identify transactions sent between your own accounts and which transactions are taxable disposals.
Verify the wallet balance
After connecting your wallets to Coinpanda, we recommend verifying the wallet balance of all your Cardano wallets. This can be done directly from the Wallet page where you will see a yellow icon if the calculated balance is different than the actual balance. If you don’t see any warning icon, the wallet balance is matching and all transactions have most likely been imported correctly.
By default, all Send transactions not identified as internal transfers will be treated as disposals and therefore realize the gains or losses. After connecting all your exchange accounts and wallets, you should therefore check that all transactions between your wallets are identified as such. There are several ways to do this, but one way is to filter for Receive or Send to see only the transactions not identified as internal transfers. Next, you can either mark the transaction as an internal transfer, or you need to connect another wallet or exchange account if you forgot this earlier.
Token and NFT values
The last crucial step is to verify that all tokens and NFTs are valued correctly to avoid paying more taxes than required when the assets are disposed of in the future. As mentioned earlier, many Cardano tokens don’t have any official market rates which means you might need to update the value manually. This can be done on the Transactions page by clicking the Value box and entering the token value on the day of the transaction.
Try Coinpanda for free
Coinpanda is one of very few crypto tax software solutions that can do tax calculations for the Cardano ecosystem correctly today. All you need to do is add your Cardano wallet address to your Coinpanda account, wait for all transactions to be imported automatically, and verify that tokens and NFTs are tracked and identified correctly.
You can sign up for a 100% free account or first read more about how the software can help you with reporting your crypto taxes. Coinpanda supports more than 65 countries today including the US, Canada, Australia, the UK, and almost all other European countries.