Taxes

Capitally offers a comprehensive tax handling system that currently supports the FIFO (First-In-First-Out) accounting rule. While there are no built-in national tax presets at the moment, you can easily create your own, tailoring it to your specific needs.

To get started, use one of the built-in presets or create your own Tax Presets in the Settings -> Taxes section. These presets define the rates for taxing different types of transactions and assets. Assign these presets to your Accounts. If an account is tax-sheltered, like a retirement account, you might not need a preset for it.

After setting up your Tax Presets, you can view the calculated tax metrics in several places:

  1. Reports -> Taxes Due Report: This report provides the accrued revenue, expenses, and taxes for each country and year, broken down by Tax Groups if your preset uses them. This is the go-to report during tax season.

  2. Reports -> Taxable Income Report: This report allows you to compare and understand taxes at a higher level, accumulated across your entire portfolio and converted to a single currency of your choice.

  3. Portfolio -> Tax Due: This section lets you freely analyze and compare tax metrics across your entire portfolio.

The tax metrics included are:

  • Tax Due: The overall amount of tax to be paid within the period.

  • Tax Paid: The amount of tax you've already paid, such as Withheld Tax on Dividends.

  • Tax to Pay: Simply Tax Due minus Tax Paid.

  • Capital Tax: Tax on the value of Capital you own, also known as Wealth Tax or Estate Tax.

  • Taxable Revenue / Expense / Income: The sum of all revenue/expenses from transactions that were taxed within the period.

  • Potential Tax: The tax you would have to pay if you sold all your currently owned assets at the end of the period.

  • Harvestable Tax: The maximum amount of tax you could potentially save by selling assets at a loss, considering the FIFO (First-In-First-Out) order of your positions. This can help you optimize your tax strategy by offsetting gains with losses.

Including taxes in return calculations

You can include both Due and Potential Tax when calculating your returns for a more accurate picture of your actual performance.

Keep in mind that Potential Tax simulates a sale of all your positions on the last day of the analyzed period, which may result in a big drop at the end of the chart. When including Potential Tax, it's best to analyze a period of at least a year.

Simplified approach

If you don't need taxes calculated within your portfolio, you can simply keep track of Taxes Paid and use the Taxable Income Report once a year as a helpful resource for you or your accountant.