We all know that trading with crypto must be included in your tax report every year. And if you are trading on Coinbase, you probably want to know does Coinbase provide tax forms? One thing is for sure – Coinbase is obliged to inform the IRS each year. But does this include you, and what are your obligations against the IRS when trading with crypto? Keep reading and find out.
Coinbase will send 1099-MISC to report miscellaneous income to all its users who have gained profit higher than $600. However, if you do not get any form from Coinbase, you will have to file a tax form yourself. US customers can use Coinbase Taxes to find everything they need to report taxes.
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US taxpayers will have to report their income, sales, conversions, and payments to the IRS. Each of these transactions has different tax implications. To learn more about how crypto trading affects your taxes, we will have to dig a bit deeper.
If you are a US taxpayer, you will receive a 1099-MISC form if you are a Coinbase customer and have received $600 or more in crypto from Coinbase. Coinbase will send both you and the IRS a 1099-MISC form with the details about your earnings on the exchange. Coinbase will not issue any other form, and once you receive this form, you will be obliged to report your income to the IRS. Here is how to do it:
- If you are self-employed – If crypto trading was part of your trade or business, report your income on Schedule C.
- Not self-employed – In case you are not self-employed, report your Coinbase income on Schedule 1.
The story doesn’t end here. 1099- MISC form doesn’t contain information about disposal events like selling crypto for fiat currency. This is something you will need to calculate alone. You can download your transaction history in the Reports section and Statement section for Pro users. The transaction history will help you to calculate capital gains and losses for the year. Coinbase recommends connecting your account to CoinTracker, a platform that can calculate your transaction history and export your tax reports.
Also, you can go on Coinbase Taxes and find everything you need regarding taxes, including forms you need to submit to the IRS.
You can download your tax report directly from Coinbase taxes under the “documents” section. However, this form will not include Coinbase Pro activity. You will have to go to the “statements section” in your Pro account to download the report. But if you connect everything with Coin Tracker, you will be able to get the more specialized reports. Also, Coin Tracker can be connected to other wallets and exchanges.
Once you go on Coinbase Taxes, you will see forms you must submit to the IRS with an explanation of how to fill this everything out. Here are the forms you need to consider:
- Form 1040 – This is an individual Income Tax return to determine your total income.
- Form 8949 – This is additional income and adjustment to the income form. Here you will report all your gains or losses when converting, selling, or otherwise disposing of your crypto.
- 1040 Schedule D – This form summarizes your capital gains and losses.
As we mentioned, Coinbase will only report “miscellaneous income” to the IRS, but you as Taxpayer will have a responsibility to report all your capital gains and losses. To understand what you need to report and how much you own, you must first learn the difference between taxable and non-taxable events when it comes to crypto trading. Here is a breakdown:
|Not taxable||Taxable as gain||Taxable as income|
|Buying crypto and holding it||Selling crypto for fiat||Getting paid in crypto|
|Donating crypto||Converting crypto to another crypto||Getting crypto in exchange for goods and services|
|Receiving a gift||Spending crypto on services and goods||Mining crypto|
|Giving a gift||Earning staking reward|
|Earning other income|
|Getting crypto from a hard fork|
|Getting an airdrop|
|Receiving other incentives or rewards|
Calculate How Much You Own in Crypto Taxes
To figure out how much you own, you must first calculate the amount you gained or lost. To do so, you will need to know your cost basis or how much crypto you started with. So when you sell crypto, all you need to do is to subtract your cost basis from the amount you earn, and if the difference is bigger than your cost basis, this means you have a capital gain, and if it is smaller, you have a loss.
There are short-term and long-term capital gains that will determine how much you own. In general, if you own the crypto for more than one year before selling it, you will pay less. Rates for long-term gains go from 0%, 15%, or 20%, depending on your income. Taxpayers with higher income may also be subjected to a 3.8% Net Investment Income Tax. Short-term gains, as we mentioned, usually have higher rates.
Coinbase does not provide any tax forms for users outside the US. However, all users will have access to their transaction history and be able to fill out taxes according to their local rules. Furthermore, even if you are a US taxpayer and you haven’t received any form, make sure you absolutely don’t need to report your income. Because if you had any income, gain, or loss on Coinbase, you would have to report this to the IRS even if Coinbase hasn’t sent you any form. This implies other exchanges as well. So be careful because the IRS is closely monitoring all crypto wallets and users.