Taxation time is Tricky for everyone. One needs to be sure what investments they have made and what is reported to the IRS.
However, if you use Crypto exchange platforms like Crypto.com, and Binance, you must be wondering if it reports to the IRS or not, this article can help you. Here is everything you need to know about Crypto.com taxation.
Know More About Crypto.com
The platform was established in the year 2016. Its founders are Kris Marszalek, Rafael Melo, and Bobby Bao. It received its first capital in 2017 June by participating in an ICO after which it raised over $25 million.
The business has experienced significant expansion. From October to February. Crypto.com worked wonders and expanded its customer base by 10 percent from five million.
One of the reasons for Crypto.com’s popularity is the extensive array of services and products that users get from the company.
It allows users to purchase and sell cryptocurrency and get amazing prizes, buy things using the debit card of the company, and even sell and buy NFTs.
Does Crypto.Com Report To IRS?
Yes. Crypto.com offers American clients a form 1099-K for transactions that exceed $20,000 of trade quantity and over 200 transactions during the year. It is also a form that the IRS requires and Crypto.com provides.
Shortly, with the passage of the American infrastructure bill, Crypto.com and other exchanges will soon have to issue 1099-reporting information for all customers
Also Read: How to Reset 2FA on Crypto.com?
What Are The Tax Implications Of Crypto.Com?
To make it easier for you to know how your Crypto.com transaction will affect your tax bill, we’ll review the fundamentals of crypto taxation.
The IRS is adamant that cryptocurrency is a type of property, which is for both capital gain taxes as well as income taxes.
tax-related situations: When the cryptocurrency you make earns a type of earning, this will be classified as your income and you will have to pay the tax accordingly.
Capital gain events: You earn capital gains and losses each time you sell your cryptocurrency. When you trade and sell your cryptocurrencies via Crypto.com, it is a good idea to fall under this category.
Can The IRS Track Crypto.Com?
Yes. Crypto.com reports transactions done on their platforms directly to the IRS. There’s no doubt that the IRS is aware that you reported cryptocurrency transactions.
If you’ve earned more than $20,000 in profits and have at least 200 transactions with cryptocurrency during a particular tax year, then you must receive a 1099-K form that reflects the amount of money you earned for each month.
Crypto.com has to prepare the forms for those who meet the criteria. A copy of the template is being sent to the IRS. If you submit your tax return and don’t include these numbers in the return, the IRS computers will likely declare your tax return to be under-reporting.
If you also receive Form 1099-B but don’t report the form on your tax returns, it’s likely to be flagged as underreporting.
Since the IRS began increasing the enforcement of cryptocurrency transactions, the IRS has sought out different blockchain companies to keep abreast of any developments in the system.
With the help of blockchain firms and blockchain companies, the IRS utilizes advanced analysis of data such as pattern recognition, pattern recognition, and machine learning to detect suspicious transactions across a variety of exchanges and billions of transactions.
The IRS is likely to use analysis of data such as this to enhance its capability to track cryptocurrency transactions and seek to pursue U.S. taxpayers that are subject to investigation.
Also Read: How to Sell Crypto on Crypto.com?
What Exactly Does Crypto.Com Send Its Information To The Irs?
Crypto.com sends IRS information about the transactions made on the platform. Also, it offers its users with 1099 K form to file taxes.
The IRS considers cryptocurrency as a property that is taxed the same way as stocks. If you only buy cryptocurrency using U.S. dollars, and these assets were sitting in a safe place in an exchange, or in your cryptocurrency wallet there’s no need to worry about reporting them to the IRS this year.
How To Download Tax Documents From Crypto.com?
If you wish to download the tax documents from Crypto.com, you will first have to prepare the tax report. Here are the steps that you will have to follow.
- Login to your Crypto.com account.
- Next, you will have to import all your transactions. You can do it in five ways. It can be using API Synchronization, adding all the transactions manually, synchronizing on the blockchain and Ethereum, importing the CSV file, and using the basic CSV template.
- Now, simply review all your transactions, and if any change is required, make it.
- You will then have to create the report that you wish. This includes your profit and loss statements, expense reports, income reports, and others.
- When done, choose the report that you wish to download and choose if you wish to download it in Xlsx format or CSV format.
Also Read: How to Transfer from Crypto.com to Trust Wallet?
Conclusion
This article serves as a complete guide aiding you to understand the way things work. It should have helped answer the issue of whether Crypto.com has a relationship with the IRS or not. Beyond that, there are more details to help you get clarity.
