wETH Tax Reporting
TokenTax connects to wETH for easy crypto-currency trade tracking and tax filing.
Background on Wrapped Ether (wETH)
Wrapped Ether, or wETH, is an ERC-20 token minted one for one per ETH. You can create wETH with a transaction to a smart contract, creating one wETH from each ETH sent. WETH facilitates trades of ETH on decentralized platforms by making ETH compliant with ERC-20 standards.
Tax considerations for Wrapped Ether (wETH)
wETH minting and trading functions the same as any other crypto trades. Trades from ETH to wETH, wETH for another ERC-20 token, and wETH to ETH are all treated as crypto trades from a tax regulation perspective. There are a few exceptions to this rule in the case of lending, which you can read about in our full DeFi tax guide.
While the tax implications of wrapped Ether are not particularly complicated, the challenge is more in collecting and aggregating all of your transactions into a standard tax format. Remember that trades of crypto for another crypto and trades of crypto for fiat currency are both taxed as capital gains and losses.
For more general information on crypto taxation in the United States and other jurisdictions, please read our comprehensive guide and ask us anything on our chat support (lower right corner).
How crypto tax software can help
There are certain protocols that will automatically wrap your ETH, so it can be tricky to sort out your taxes without delving into your transaction history. Similarly, if you used a few different Decentralized Finance (DeFi) platforms, you may not know all of the tax implications of your activities, so we would highly recommend using a service that can handle unwinding all of your trades and standardizing them into an easily digestible tax format.
Crypto tax software in this way can automatically import, parse, organize and calculate your crypto taxes. From there, you can pick whichever export format suits your needs -- Excel, PDF tax form, TurboTax import, etc. Particularly in years in which you traded multiple assets across a variety of platforms, these automated calculations are highly useful.
In addition to the transaction history aggregation and standardization support provided by crypto tax software, you can also use automated tools to reduce your tax liability. In particular, many users find year-end tax loss harvesting to be a helpful tool to strategically sell off underperforming assets as a way to claim capital losses on their taxes in order to reduce their tax bill.
Tax saving accounting is also automated by our minimization algorithm, which helps traders by automatically calculating their lowest potential capital gains tax liability.
Importing a wETH API into TokenTax
Add any ETH address(es) that you've used for WETH to TokenTax and your WETH swaps will be imported. We only require your public address and will never ask for private keys.