Normally they are fees for canceled or failed transactions or transactions that don’t generate a capital gain/loss - like perps, pools.
Exchange fees are included in the cost of the crypto traded.
I’m sure u/JustinCPA can provide more specific details as he works at CTC/Summ
From my experience the fee category can contain multiple types of transaction. The more important question is whether they can be used to reduce taxable income.
That depends - for which country are you reporting?
In the US, you can use fees to increase the cost basis of the tokens received, or reduce the proceeds of the tokens you disposed of.
Ex. If you mint an NFT for $1000 and the platform charges a $10 fee the cost basis of the NFT can be stepped up to $1010.
AFAIK tax software doesn’t always do this for you automatically.
It will end up in 8949 and Schedule D which will be part of your 1040 filing.
Your tax software should provide you with the forms you need for your accountant. If self filing then you need to make sure the fees were included in the gains report for turbotax, etc.
In CryptoTaxCalculator (Summ), the “fees” section is essentially a summary of transaction fees you’ve paid (trading fees, network/gas fees, withdrawal fees, etc.) that were incurred while buying, selling, or moving crypto.
They don’t work like a normal business expense that directly reduces your taxable income on their own. Instead, most of these fees are already baked into the tax calculations. For example, fees paid when buying crypto usually increase your cost basis, and fees paid when selling usually reduce your proceeds. Network fees paid as part of a disposal are also typically factored into the gain or loss calculation.
The reason they’re shown separately in the report is mainly for transparency and reconciliation, so you can see how much you paid in fees over the year. In most cases, you shouldn’t deduct that “fees” total again, because doing so would double-count them. The actual tax benefit comes from how those fees adjust your gains and losses, not from claiming them as a standalone deduction.
What goes into the “fees” category?
This bucket usually includes crypto fees that are not directly tied to a taxable buy or sell, such as:
Approval fees
Gas paid for wallet actions
Failed transactions
Contract interactions that didn’t result in a trade
Misc on-chain operational fees
These are real costs, but they’re not clearly attached to acquiring or disposing of an asset.
Do these fees reduce taxable income?
Usually, no.
Under current US tax rules:
General investment expenses are not deductible for individuals
Fees only reduce taxes if they are directly part of a taxable transaction
So:
Fees paid as part of a sale or swap can reduce capital gains (as selling expenses)
Fees that stand alone (approvals, wallet actions, failed txs) do not reduce taxable income
That’s why crypto tax tools separate them out instead of netting them against gains.
Bottom line:
The “fees” category is mostly for tracking and transparency.
Unless the fee is directly tied to a sale or purchase, it usually does not lower your tax bill.
Normally they are fees for canceled or failed transactions or transactions that don’t generate a capital gain/loss - like perps, pools. Exchange fees are included in the cost of the crypto traded.
They can reduce other income - staking, airdrops.
I’m sure u/JustinCPA can provide more specific details as he works at CTC/Summ
From my experience the fee category can contain multiple types of transaction. The more important question is whether they can be used to reduce taxable income.
That depends - for which country are you reporting?
In the US, you can use fees to increase the cost basis of the tokens received, or reduce the proceeds of the tokens you disposed of.
Ex. If you mint an NFT for $1000 and the platform charges a $10 fee the cost basis of the NFT can be stepped up to $1010.
AFAIK tax software doesn’t always do this for you automatically.
Thank you. Yes, US. That's helpful. So how is this done on a tax return? It's done on a 1040? 8949?
It will end up in 8949 and Schedule D which will be part of your 1040 filing.
Your tax software should provide you with the forms you need for your accountant. If self filing then you need to make sure the fees were included in the gains report for turbotax, etc.
The fees will be on the 8949? Do they have to be grouped as a part of transactions in order to put them there? Or could they be standalone?
In CryptoTaxCalculator (Summ), the “fees” section is essentially a summary of transaction fees you’ve paid (trading fees, network/gas fees, withdrawal fees, etc.) that were incurred while buying, selling, or moving crypto.
They don’t work like a normal business expense that directly reduces your taxable income on their own. Instead, most of these fees are already baked into the tax calculations. For example, fees paid when buying crypto usually increase your cost basis, and fees paid when selling usually reduce your proceeds. Network fees paid as part of a disposal are also typically factored into the gain or loss calculation.
The reason they’re shown separately in the report is mainly for transparency and reconciliation, so you can see how much you paid in fees over the year. In most cases, you shouldn’t deduct that “fees” total again, because doing so would double-count them. The actual tax benefit comes from how those fees adjust your gains and losses, not from claiming them as a standalone deduction.
Thanks for your time. I feel like what you say is inconsistent with this article. https://help.summ.com/en/articles/6327018-miscellaneous-expense-report It says, "The Miscellaneous Expense Report lists standalone Fees, Approval, and Expense transactions that can be used for a business. Keep in mind that if a fee is added to the cost basis, it can’t be treated as an expense, and vice versa."
Also the "total gains" item subtracts fees after subtracting capital gains and including capital losses in order to arrive at the figure.
What goes into the “fees” category? This bucket usually includes crypto fees that are not directly tied to a taxable buy or sell, such as:
Approval fees
Gas paid for wallet actions
Failed transactions
Contract interactions that didn’t result in a trade
Misc on-chain operational fees
These are real costs, but they’re not clearly attached to acquiring or disposing of an asset.
Do these fees reduce taxable income? Usually, no.
Under current US tax rules:
General investment expenses are not deductible for individuals
Fees only reduce taxes if they are directly part of a taxable transaction
So:
Fees paid as part of a sale or swap can reduce capital gains (as selling expenses)
Fees that stand alone (approvals, wallet actions, failed txs) do not reduce taxable income
That’s why crypto tax tools separate them out instead of netting them against gains.
Bottom line: The “fees” category is mostly for tracking and transparency. Unless the fee is directly tied to a sale or purchase, it usually does not lower your tax bill.