It’s been established that virtual currencies have gained the status of a mainstream currency since everyone can utilize them to transfer items and services.
Though still relatively new, cryptocurrency is now counted in your assets, and the transactions you conduct using them (at the very least within the U.S.) are tax-deductible.
Suppose you do the majority of your cryptocurrency transactions through Coinbase. In that case, You’re probably thinking about whether those transactions have been reported to the IRS and if you’re required to file a tax return to pay the tax that you’ve incurred.
In this article, we’ll guide you through the taxes you must pay for selling or buying crypto, what Coinbase is reporting to the IRS, as well as other information.
Does Coinbase Report To IRS?
Yes, Coinbase report to IRS. It is a fact that the IRS should know about any of your transactions that you made with the help of Coinbase. It is the reason why Coinbase needs to report to the IRS.
Being one of the major names in cryptocurrency as well as Bitcoin trading, Coinbase is not just a wallet but is a wonderful platform that enables people to buy and sell cryptocurrencies like Bitcoin, Ethereum, etc.
Coinbase IRS Reporting Threshold
At present, Coinbase sends Forms 1099-MISC to U.S. traders who made more than $600 through cryptocurrency rewards or stakes in the previous tax year. It is important to note that this form is not declaring any capital losses or gains.
The exchange provides two versions of the tax form, one to the taxpayer and the other to the IRS. Suppose you’ve received a 1099-MISC from Coinbase and the IRS. They’ll also expect you to report taxes on the cryptocurrency you earn.
The 1099-MISC doesn’t record the capital gain or loss. However, this doesn’t mean you shouldn’t report these. The tax form 1099-MISC indicates to the IRS that the user is using Coinbase and could have other transactions than the reporting of rewards or stakes.
Does Coinbase Send 1099?
1099 forms mainly provide data and information to the IRS about all the other income sources that you have apart from the non-employment-related work. In other words, 1099 forms are created to record income you earned that was not directly from your employer.
There are various kinds of 1099 forms available, but we’ll only focus on three of the most relevant for this piece.
- Form 1099-K is used frequently by credit and debit card companies and other payment settlement companies. This form informs the IRS of the amount of transactions processed payments.
- Form 1099-MISC can be used for reporting “miscellaneous income’ in the hands of the IRS. The rewards from referrals and stakes could fall under this miscellaneous category.
- Form 1099-B can be used to provide details about the disposal of security or property by brokers. You may have heard of this type of form when you’ve ever used stock exchanges such as Robinhood and E-Trade.
Also Read: How to Transfer Crypto from Coinbase to Crypto.com?
Does Coinbase Send A 1099-K?
Prior to the year 2021, Coinbase issued a form 1099-K to you. Return if:
- You were one of the Coinbase Pro or Coinbase Prime customers.
- You made 200 or more transactions with a total value at or above $20,000* (OR you met your state’s 1099-K thresholds for reporting)
- U.S. taxes taxed you.
If you fulfilled all three conditions prior to 2021, Coinbase will issue 1099-K to you. Coinbase discontinued issuing this form to its customers after 2020.
Does Coinbase Send A 1099-Misc?
You will be issued a Form 1099-MISC if you:
- Are you a Coinbase customer
- You have received at least $600 in cryptocurrency from Coinbase Earn USDC rewards or Staking.
- Are taxed by U.S. taxes
If you meet all three of these criteria, each of you and the IRS will receive an official duplicate of the 1099-MISC.
1099-MISC provides the total amount of earnings you’ve received through Coinbase.
Here’s how to include the income on Form 1099-MISC of your taxes return.
- Self-employed: If you’re self-employed and your cryptocurrency-related activities constitute a business or trade, the income earned by Coinbase must be listed on Schedule C.
- If you are not self-employed and do not have a job, then your earnings from Coinbase are reported as an ‘Other income’ in Schedule 1.
- Your 1099-MISC form does not include tax-related information on disposal events, for example, selling your cryptocurrency in exchange for fiat. It is your responsibility to determine your tax obligation for these transactions.
Also Read: How to Connect Coinbase to Coinbase Wallet
Does Coinbase Send A 1099-B?
As of now, Coinbase does not issue 1099-B forms for customers.
But, this is likely to change in the near term. In 2021, the American infrastructure bill will require cryptocurrency brokers such as Coinbase to issue 1099-B forms to customers and the IRS beginning in 2024.
Will Coinbase Give Me 1099?
Today, Coinbase only sends 1099 if you’re a member of one of their Prime, Pro or Merchant accounts and you’ve reached the minimum threshold for transactions. For users who are not basic, there is no 1099-K. Typically, the minimum requirement for the 1099-K is $200 transactions, totaling more than $20K. There could be other thresholds in the state you reside in.
At present, Coinbase sends Form 1099-MISC to customers who live in the United States and earn at least $600 from the platform.
Did Not Receive 1099 From Coinbase?
Suppose you made trade-in crypto or earned cryptocurrency from the staking process or from reward on Coinbase in the previous tax year.
In that case, you are required to report capital gains or losses and earnings regardless of whether you were issued a 1099-MISC or otherwise.
To view your transaction information, view your transaction data on Coinbase Visit the Reports tab on your account. If you are using Coinbase Pro, this data is located in the section of your statements.
When Did Coinbase Start Reporting To The IRS?
Coinbase is a cryptocurrency exchange Coinbase began submitting a 1099 form with the IRS and to individual users in 2017.
Also Read: How to Change Phone Number / Email Address on Coinbase?
Can The IRS Track Coinbase?
Coinbase customers can review the entirety of their tax-deductible activities to determine whether they owe tax and the amount they will have to pay.
Coinbase offers a report of your activities that include the type of assets you purchased and sold, as well as the amount you received — organized by date, realized loss/gain, and tax consequences.
According to Coinbase, its new section, it will provide “a personal overview of [a client’s] tax-deductible transactions on Coinbase which is broken down in time by realized gains and losses and other income.”
The information could then be presented to an accountant or utilized with tax software, such as TurboTax.
What Exactly Does Coinbase Send To The IRS?
Coinbase sends all the information about its cryptocurrency transaction to the IRS.
The IRS believes that cryptocurrency assets to be “property” to be tax-exempt. This means your virtual currency is taxed in the same manner as other assets you own, such as gold or stocks.
Conclusion
Well, this article acts as a comprehensive guide in helping you understand how everything works. It must have helped with the query whether Coinbase reports to the IRS or not.
Apart from that, there is some additional information as well so that you get the clarity.
