Make no mistake, taxes are payable on crypto gains in the US. But will Coinbase report your activity to the IRS? Let's find out.
Traders can no longer be forgiven for thinking that crypto gains are tax-free. Globally, and certainly here in the US, authorities have made it very clear that Capital Gains Tax and Income Tax is payable on crypto. There's no doubt that failing to meet your tax obligations will land you in hot water - be it a fine, or even jail time depending on the scale of evasion.
That's why it's incredibly important to report crypto and DeFi gains and losses - whether your exchanges are known to report to the IRS, or not.
Still, investors have every right to know how their trading data is being shared. Especially when it comes to their dealing with Coinbase - one the biggest cryptocurrency exchanges in the USA, and one that's a regular headline grabber when it comes to regulation.
So to answer the question - let's explore whether Coinbase in the US hands over customer trading data to the IRS, or not.
Does Coinbase send trading reports to the IRS?
Does Coinbase report to the IRS? Yes. Coinbase reports your cryptocurrency transactions to the IRS before the start of tax filing season. As a Coinbase.com customer, you'll receive a 1099 form if you pay US taxes and earn crypto gains over $600.
Yes. Crypto exchange Coinbase began submitting 1099 forms to the IRS and to individuals users in 2017.
Does Coinbase send investors 1099 forms?
For the 2020 US tax season, Coinbase will issue the IRS Form 1099-MISC for rewards and/or fees through Coinbase.com, Coinbase Pro, and Coinbase Prime.
For every U.S. crypto trader that makes more than $600 in the previous financial year, Coinbase will send two copies of Form 1099-MISC to the IRS: One to the taxpayer and one to the IRS.
What is Form 1099-MISC?
1099 forms are used to report any and all income that does not come from an employer. This is where cryptocurrency gains and losses should be reported.
When do investors receive Form 1099 from Coinbase?
You may receive a 1099-MISC from Coinbase if:
- You are a Coinbase customer AND
- You are a US person for tax purposes AND
- You have earned $600 or more in rewards or fees from Coinbase Earn, USDC Rewards, and/or Staking in 2020.
Do all Coinbase customer's receive IRS forms?
No. Selected US customer's may receive Form 1099-MISC from Coinbase if they meet certain criteria only. International customers - as in - not US taxpaying customers, will also not receive Form 1099.
What if I don't get a Coinbase 1099 form?
Even if you don’t qualify for this form, you are still required to report all cryptocurrency transactions to the IRS every tax season.
When Does Coinbase Report to the IRS?
The US financial year runs from 1 January to 31 December. So Coinbase tax reporting happens between the end of the financial year, and before the filing deadline, which is 15t of April 2022.
How complete is the information in Coinbase reports?
Coinbase 1099 forms only describe total crypto gains and losses, and only those generated through the Coinbase platform. For traders who user multiple exchanges, the 1099 from Coinbase is not enough to report crypto taxes with.
How do I get a complete tax report from Coinbase?
Coinbase will only issue 1099 forms to select customers - and this will only describe Coinbase activity. For everyone else, traders with multiple exchange accounts, and international customers, you'll need to download your Coinbase transaction history to fulfil your tax filing obligations.
Where can I download Coinbase trade history?
Coinbase.com customers can download transaction history in the reports tab. For Coinbase Pro, visit statements section to download Pro transactions.
To calculate your gains/losses for the year and to establish a cost basis for your transactions, we recommend connecting your account to CoinTracker. Click here for more information.
Is there a Coinbase tax calculator?
Yes. Koinly is a Coinbase tax calculator. Not only can Koinly import your Coinbase transaction history directly from Coinbase itself, but Koinly can also calculate your Coinbase taxes in a format that makes sense for the IRS.
As a Coinbase tax software, Koinly is able to do a bunch of impressive tasks that save you time and can even save you from paying too much taxes.
- First, Koinly will import all your Coinbase trades including purchases, sales, swaps, rewards and more!
- Next, Koinly will then convert your Coinbase transactions into your country’s currency, at fair market value. This in itself is a massive time saver.
- Finally Koinly works out which of your Coinbase trades are taxable, and which are not. All of this is really important for being able to submit an accurate Coinbase tax return to your tax office.
You can learn more about how to get your complete Coinbase taxes done here.
Does Coinbase provide 1099-Ks?
As of the 2020 tax year, Coinbase will not be issuing Form 1099-Ks for trades on Coinbase.
Does Coinbase provide 1099-Bs?
No. Coinbase does not issue Form 1099-Bs.
When does the IRS send a B-Notice?
Coinbase customers may receive an IRS B-Notice if there are any discrepancies with your tax identification number (TIN) and legal name used by Coinbase to file Forms 1099 with the IRS. The B-Notice will:
- Prescribe what information is needed to resolve the B-Notice.
- Inform you if you are required to provide any additional information beyond updating or correcting your name or TIN
To correct your TIN and/or name, customers will need to contact Coinbase Support. For more information about the IRS B-Notice, please go here.