For the 2020 tax year and after, Coinbase stated that they might no longer provide their users with Form 1099-K and this has caused some serious tax issues.
So now the question is does Coinbase provide tax forms now?
Coinbase would rather provide them with Form 1099-MISC. Unfortunately, the 1099-MISC by Coinbase may not provide all the information you want to correctly submit your cryptocurrency taxes.
Let us learn about everything you need to know if Coinbase does send tax forms.
Crypto Tax & Tax Reporting
The IRS treats cryptocurrencies as investments and property rather than as money. Consequently, all transactions—from selling coins to making purchases with them—are taxed in the same way as other capital gains and losses.
Capital Gains
Based on how much the price of your cryptocurrency has changed since you first received it, you may make or lose money when you sell it. Examples of disposals include exchanging your cryptocurrency for fiat cash or selling it for another one.
Ordinary Income
Ordinary income is determined by the fair market value of your coins at the time you gained them. If you obtained crypto as income (either from mining, staking, or interest accounts), you will need to calculate this income based on that value.
Coinbase Tax Forms: Does Coinbase Provide Tax Forms?
Contrary to popular belief, capital gains and losses aren't the only things that need to be reported when it comes to cryptocurrency taxes. A cryptocurrency that is subject to conventional income tax is disclosed in Coinbase tax forms.
Now the most important question a crypto user will have is: does Coinbase send tax forms?
Coinbase Form 1099-K
Credit, debit cards, and other related payment systems generally employ Form 1099-K. The IRS can see on the form how many transactions you've handled.
Form 1099-K adds up all of your trades within your account and provides that figure to the IRS, as opposed to disclosing profits and losses (which are the true numbers you need for cryptocurrency tax reporting). Because of this, when Coinbase previously issued Form 1099-K, it seemed as though consumers had a sizable amount of untaxed income on their tax records.
Coinbase IRS Reporting Threshold
If a customer meets the criteria below, Coinbase will generally issue them a 1099-MISC form.
- You are a user of Coinbase
- You are an American resident
- You received incentives via Coinbase Earn, UDSC Rewards, or staking that totaled at least $600
Does Coinbase Provide Form 1099-K Tax Forms?
After 2020, Coinbase ceased distributing Form 1099-Ks because of some uncertainty.
The IRS sent CP2000 letters (discussed below) to hundreds of Coinbase users alleging they materially underreported their income for the year since the 1099-Ks indicated the total volume of transactions.
Current Scenario of Coinbase 1099
Form 1099-MISC is now produced by Coinbase. Reporting "miscellaneous revenue" like referral and staking incentives is done using this form.
Naturally, you must disclose each and every one of your taxable events on your year-end tax form. You must declare profits, losses, and earnings on your taxes even if you do not get a Form 1099 for your cryptocurrency.
Bonus: What is the CP2000 Letter?
The CP2000, known as an IRS Notice CP 2000, includes measures people should take to address the flaws the IRS detected, along with specific information about the issues.
Does Coinbase Send 1099-B Tax Forms?
Owing to the passing of the 2021 infrastructure bill, Coinbase will probably soon be compelled to provide 1099-B forms to all clients. This form is intended to collect data on the sale of assets like cryptocurrency.
Coinbase Tax Forms: The Present Scenario
Even though Coinbase no longer provides consumers with Form 1099-K, if you used Coinbase between 2014 and 2019, you can still be affected by its tax implications.
Form 1099-K only reveals total sales volume, not your cost basis, but a 1099-MISC reports Coinbase's regular revenue (the amount you initially paid for your crypto). As a result, because the 1099-K does not account for the price you paid for the cryptocurrency you subsequently sold, it tends to overreport the overall amount of capital gains you have.
Thousands of cryptocurrency traders who they believed had underreported their revenue received crypto letters from the IRS. Users of Coinbase have received IRS Letters 6174, 6174-A, or 6173, as well as IRS, Notices CP2000 and CP2501. These mailings frequently rely on erroneous data from Form 1099-K.
The 1099-MISC is therefore an upgrade over the tax documents that Coinbase previously sent, although being somewhat inadequate.
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