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Tax Optimization dashboard

Written by Robin Singh

Tax Optimization dashboard shows the potential gain/loss from selling currently held assets and its effect on your total capital gains in the current year. Where applicable, it provides a breakdown of long/short term gains generated from selling selected assets.

You can access it from the main Koinly Dashboard:

Purpose

With the Tax Optimization dashboard, you can:

  • Decide if now is a good time to sell

  • Identify tax loss harvesting opportunities

  • Simulate effect on your total gains from selling specific assets

Tax Optimization Overview

Realized and Potential Gains Overview

These cards give you an overview of your gains and losses:

  • Realized Capital Gains

    • Shows the current status of your capital gains and losses

    • These figures are based on transactions existing in your account

    • Table will show a breakdown of long/short term gains where applicable
      ​

  • Post-Harvest Gains

    • Gives an updated overview of your gains if you were to sell assets selected in the "Asset Table"

    • It updates in real-time as you work with the Asset Table.

Asset Table Overview

The Asset Table is where you get into the details and plan your next moves:

  • Asset Information

    • Lists each asset you own, including the amount and its current market value

    • You can edit the current market rate of the asset to test different "What if" scenarios
      ​

  • Gains Analysis

    • Breaks down your potential gains or losses into short-term and long-term, if your country tracks short/long-term assets separately.

  • Selective Preview

    • To see "what happens if I sell this crypto now", select the checkbox next to it

    • Post-harvest gains table will automatically refresh with the updated figures

    • You can test different scenarios by selecting/deselecting assets in the table

Filtering Options

There are two toggles available to filter out transactions shown in the Asset table:

  • Assets with Unknown Price

    Show or hide assets without a current market rate
    ​

  • Assets with Positive Gains
    Show or hide assets that are currently profitable in the long- and short term, and may not be suitable for tax loss harvesting.
    ​

How to use the Tax Optimization dashboard

☝️ Using the Tax Optimization dashboard is not equivalent to Financial Advice
Actual tax impact can vary based on individual circumstances that may not be visible in the data imported to Koinly. Always consult with a tax professional.

Consider an situation below:

  • You've been holding both Bitcoin and Ethereum for less than a year.

  • Bitcoin has increased in value since you bought it

  • Ethereum has seen a decrease.

With the end of the tax year approaching, you decide to review your portfolio on the Tax Optimization dashboard:

  • Realized Capital Gains
    You notice that you have some realized short-term gains from earlier in the year from selling other assets.
    ​

  • Asset Table
    Here, you see your holdings in Bitcoin and Ethereum. Bitcoin shows a substantial unrealized gain, while Ethereum is at a loss (note that we have selected the option to include assets with positive gains).
    ​

  • Strategic Selection
    To balance your realized gains and reduce your overall tax liability, you consider selling some Ethereum. You select the checkbox next to Ethereum in the Asset Table. The Post-Harvest Gains section updates to reflect the loss from Ethereum against your realized gains.
    ​

  • Reviewing the Impact
    After selecting Ethereum, you see that the potential loss from selling it could offset some of your realized gains, which may lower your tax bill.

Thanks to using the Tax Optimization dashboard, you were able to identify actions you need to take for a more favorable tax situation: if you actually sell your ETH, your taxable gains (and therefore your taxes owned) will decrease! 🎉

Limitations

  1. Not all cost basis calculations methods are supported

  2. Wallet-based cost tracking limitations

Cost basis methods supported

Tax Optimization dashboard is currently available if your selected cost basis calculation method is:

  • FIFO

  • LIFO

  • HIFO

  • ACB

  • Share Pooling (🇬🇧 UK)

Tax Optimization dashboard is not available for other cost basis calculation methods such as PFU/France, ACB/Canada, Optimized HIFO, or FIFO/Ireland.

Limitations due to wallet-based tracking

Tax Optimization dashboard shows only the overall breakdown of long- and short-term gains, not in which wallet those lots are located.

Because of this, it may be more useful to simulate effect of selling assets manually - see below.

Manually simulating trades

If you cannot use the Tax Optimization dashboard due to its limitations, you can still simulate/predict the outcome of potential sales in Koinly by adding transactions manually.

  • Note your current total taxable gains on the "Tax Reports" page

  • Go to "Transactions" page and add a manual withdrawal of an asset you are considering selling

  • Add it with the current date/time

  • You don't need to set the worth of the withdrawal as Koinly will add it automatically - but you can if you want to see what the outcome would be for a particular market rate

  • Wait for the calculations to finish

  • Review the gain/loss calculated for this disposal

  • Check the "Cost Analysis" tab of this transaction to see if the disposal was classified as long- or short-term (where applicable)

  • Go to the Tax Reports page to see how your total taxable gains changed

☝️ Remember to delete those transactions from Koinly afterwards

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