Currently, Coinbase only reports Form 1099-MISC to the IRS for users who have earned $600 or more in crypto. However, users are still required to report Form 1099-MISC themselves, as well as other relevant forms like Form 1040, Form 8949 and Schedule D.
Still, the exchange says its approach to reporting to the IRS might change in the future, so make sure to check with them for the most up-to-date information.
Please note that the following is a summary of Coinbase’s stance on reporting to the IRS and the tools they provide to simplify the process for their users. If you have any questions about your taxes, make sure to consult a tax professional.
What’s included in the Coinbase Form 1099-MISC report?
As we’ve mentioned above, Coinbase will report a Form 1099-MISC for every user that has earned $600 or more in a year using the exchange’s staking or crypto rewards products. Despite this, users must still report their Form 1099-MISC themselves, even if they have earned less than $600 using these products.
Coinbase’s 1099 MISC report will contain information about how much you’ve earned using the following products:
- Coinbase Earn
- USDC Rewards
Coinbase’s IRS reporting currently does not contain information about your gains or losses from buying or selling Bitcoin or other cryptocurrencies. It also doesn’t include purchases of goods and services you’ve made with crypto using Coinbase.
Coinbase provides tools that will help you get started with reporting taxes to the IRS
Coinbase users can access a gain/loss report that provides an overview of every transaction they’ve made on Coinbase with capital gain or loss implications. You can access your gain/loss report using the Coinbase Taxes feature. The gain/loss report is not an official form, but it helps users with preparing their own tax reports. Currently, Coinbase does not report this information to the IRS.
Importantly, users can choose between different cost basis methods for their gain/loss report. This includes “highest in, first out”, “last in, first out” and “first in, first out”. Coinbase recommends that users procure advice from a tax professional before to determine the cost basis method they should be using.
Coinbase users also have the option of receiving a raw transaction report, which can be used to manually calculate gains or losses. The raw transaction report provides a list of the cost basis of the user’s entire transaction history, and doesn’t include calculated gains and losses.
Crypto taxes in the United States
In the United States, there are two types of taxes that apply to those investing and earning with cryptocurrency: capital gains taxes and income taxes.
Crypto-related transactions that are taxable as capital gains include selling cryptocurrency for USD at a profit, converting between different cryptocurrencies, or buying goods and services with crypto (the IRS views this similarly as selling the cryptocurrency).
Please note that capital gains taxes can be long-term or short-term. Long-term capital gains are taxed at a reduced rate. If you held your crypto for more than a year before selling it, this reduced tax rate will likely apply to you.
Meanwhile, crypto-related transactions that are subject to income tax include transactions like receiving cryptocurrency as payment by your employer, selling goods and services in exchange for crypto, cryptocurrency mining, earning staking rewards, receiving airdrops, and more.
The bottom line — Coinbase currently only reports Form 1099-MISC to the IRS
Curently, Coinbase only reports Form 1099-MISC for customers that earn $600 or more in a year using products like staking. However, even users who earn less than $600 through these products must report this income to the IRS.
You’ll have to report any gains you make from crypto on Coinbase to the IRS. Thankfully, Coinbase’s gain/loss report will make it easier for you to determine how much you’ve made or lost with your crypto investing during the year.
Frequently asked questions
Many cryptocurrency investors have questions related to Coinbase and taxes. Here’s the answers to some of the most commonly asked questions on this topic.
Does Coinbase report to the IRS?
Yes, Coinbase reports a Form 1099-MISC to the IRS for customers that earn $600 or more in a year using the following products:
- Coinbase Earn
- USDC Rewards
Currently, Coinbase does not report any other forms to the IRS. Customers have the responsibility to provide the relevant information to the IRS. However, Coinbase does provide customers with a gain/loss report and a raw transaction report, which make the process of filing taxes easier.
Does Coinbase report to the IRS if you don’t sell?
Buying cryptocurrency and holding it is not a taxable event, so there is nothing for Coinbase to report to the IRS in this scenario. However, if you’re using your crypto to earn income through products like staking, you will have to pay taxes on the income. If and when you sell your crypto, you will have to report any gains or losses you realized to the IRS.
What happens if I don’t report my crypto profits on Coinbase?
If you make any capital gains with crypto investing, or earn using your cryptocurrency on Coinbase, you have to report this information to the IRS. If you fail to report profits or income originating from your crypto holdings, you could be subject to fines or even jail time depending on the scale of the offence.
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