How to calculate your Polygon taxes

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1 min read
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Sam Adams
Samantha Adams
Head of Content

Recap has a comprehensive integration with Polygon that makes it easy to manage your crypto tax calculations. Sign up for Recap and link your Polygon wallet to securely monitor each transaction, manage your cryptocurrency portfolio, and effortlessly automate your taxes.

*Disclaimer: The information provided in this content does not endorse Polygon. Furthermore, it does not constitute tax advice. If you are uncertain about any financial or tax-related matters, we strongly recommend seeking guidance from a qualified tax professional. Additionally, you may utilise our accountant and professional advisor sharing features.

What is Polygon?

Polygon is a Layer 2 scaling solution and decentralised platform launched in 2017 that aims to transform Ethereum into a multi-chain ecosystem with interconnected blockchain networks. Its native token is MATIC.

Here's a breakdown of what Polygon offers:

  • Layer 2 Scaling: Provides scaling solutions to improve transaction speeds and reduce costs on the Ethereum network by processing transactions off-chain while maintaining security and decentralisation.
  • Sidechains: Utilises sidechains, which are parallel blockchains running alongside the Ethereum mainnet, to handle a large volume of transactions and smart contracts.
  • Interoperability: Facilitates communication and interoperability between different blockchain networks, allowing assets and data to move freely across chains.
  • EVM Compatibility: Fully compatible with the Ethereum Virtual Machine (EVM), enabling developers to deploy and run Ethereum-compatible smart contracts and dApps on Polygon with minimal changes.

How to automate your Polygon crypto taxes with Recap

You can make the process of calculating your taxes stress-free with our crypto tax software. Connect your Polygon wallet to Recap, and our system will classify and value all transactions using our unique fair-market valuation engine and determine your tax liability.

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How are Polygon Transactions Taxed?

Tax implications on your Polygon transactions differ based on transaction types and your tax jurisdiction. Here are the tax guidelines for the different transaction types on Polygon:

Transaction typeCGTIncomeTracked in Recap
Deposits
Withdrawals
Buying crypto with fiat
Crypto to crypto
Selling crypto for fiat
Earning staking rewards

Refer to our tax guides for a more detailed look at crypto tax rules.

Help Guides

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Automate your Polygon tax reporting - takes 5 mins.

  • 1

    Sign up to Recap

  • 2

    Set up auto sync with our step by step guide

  • 3

    Generate your tax report ready to self-file or share with your accountant

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FAQs

Do I have to pay tax on my Polygon transactions?

Yes, you may need to pay tax on your Polygon transactions. Tax obligations vary depending on your country’s tax laws and the nature of your transactions. Common taxable events include selling cryptocurrency, trading between coins (crypto to crypto), and making purchases with crypto.

Do the tax authorities know about my Polygon transactions?

Tax authorities may become aware of your Polygon transactions through various means, such as data-sharing agreements between crypto exchanges and tax authorities or during tax audits. It's essential to report your crypto transactions to avoid penalties accurately. Using a crypto tax software like Recap can help ensure your transactions are properly recorded and reported.

What is the benefit of using a crypto tax calculator?

A crypto tax calculator automates the process of calculating taxes on your cryptocurrency transactions, providing accurate tax liability figures and ensuring compliance with tax regulations without manual calculations.