People around the globe have started investing and trading cryptocurrency. Although crypto has its ways of turning rags to riches, there’s one side to it that is very confusing: filing and reporting taxes.
Now there are a lot of crypto exchanges and brokerages that can help you with your taxes. One such brokerage is Robinhood which exclusively gives you access to Robinhood crypto 1099 tax documents which will help you file and report your taxes.
Let’s go through the why, what and how of Robinhood and understand how do you pay taxes on Robinhood stocks as well.
Robinhood: Why Use Robinhood?
With the average age of the target audience being 31 years, Robinhood’s simplicity, user-friendly interface, minimum fees, and just the right amount of features have been attracting the younger demographic since its inception.
Robinhood has over 13 million active users around the world. What is the reason for its popularity?
- Apart from cryptocurrency, one can trade traditional stocks & ETFs
- Easy to use interface
- Fast and streamlined trading experience
- Basic charting available on both mobile and web versions
Another advantage of using Robinhood is that you can access Robinhood tax documents that will help you file your tax returns.
Robinhood Crypto 1099 Tax Documents
Robinhood will provide you with a consolidation of the following 1099 tax documents:
The Robinhood crypto 1099-B gives detailed information about the transaction, such as the description of the item, date of acquiring and selling, cost at which it was acquired, selling price, and so on. This consolidated information is provided by Robinhood.
The IRS 1099 tax forms that you’ll receive are from Robinhood Securities as well as Robinhood Crypto.
Robinhood Crypto IRS Form 1099
You’re likely to receive the Robinhood Crypto IRS Form 1099 if you had sold your crypto assets anytime in 2020. You’ll not only get the PDF format of the form, but also a CSV format that can easily be imported into tax reporting software like ZenLedger.
Robinhood Securities IRS Form 1099
If you have had any taxable events in 2020, you’ll receive Robinhood Securities IRS Form 1099.
But how can you access these Robinhood crypto 1099 tax documents from their website?
How To Access Robinhood Tax Documents
Now that we know which Robinhood tax documents are provided, we must learn how to access these documents. The process is extremely simple and all you need to do is follow these three steps:
- Click the Account option on the bottom right corner of the screen
- Then choose Statements & History
- Click on Tax Documents option
You can access the tax reports on a monthly basis, for your yearly taxes, and also on the basis of specific transactions.
Using ZenLedger As A Tax Reporting Tool
ZenLedger is a popular and reliable crypto tax calculation software. Let’s understand how you can use ZenLedger to calculate taxes.
Suppose you have downloaded the CSV format of your Robinhood tax documents. Simply follow the steps given below:
- Login to your ZenLedger account.
- Click on the Import and choose Add Account
- Choose Robinhood from the list of options given on the top. Now you can simply drag and drop (or browse) your Robinhood CSV file
- Click on Next Step and then tap on Tax Calculation
If you want to verify the file you have imported:
- Go to the Import tab
- Click on View Imported History
In order to calculate the taxes:
- Go to the Taxes tab and select the corresponding year of taxes you want to calculate from a dropdown menu.
- Choose the accounting method from the dropdown menu. ZenLedger allows you to choose from the three major accounting methods- FIFO, LIFO, and HIFO. Another great feature of ZenLedger is that it allows you to add a tax professional while you’re calculating taxes on this tab.
How Do You Pay Taxes On Robinhood Stocks?
As we all know, apart from letting people invest in cryptocurrency, Robinhood also lets them invest in traditional stocks. In this aspect, a very important question that comes to one’s mind is- how do you pay taxes on Robinhood stocks?
If you sell any stock being a Robinhood client, you must pay taxes on your income or gains. When there are no dues left on your transactions, you will receive the consolidated Robinhood tax documents, which are nothing but detailed information about Robinhood crypto 1099 tax documents. This information contains everything that you need to report your taxes- be it on cryptocurrency or on stocks.
Also, note that you do not have to pay taxes on any investment that you’ve held. It’s only when you sell them (exchange for another asset) that they’re subjected to taxes.
Why Can’t I See the Tax Document on Robinhood?
If you can’t see your tax documents on Robinhood, these may be the reason:
- You didn’t sell any tokens
- If you earned $10 or less in interest
- If you got less than $600 in misc income
How to Access Your Robinhood Tax Documents If Your Account is Closed?
You can view your 1099 form even if your Robinhood account is closed. First, you need to download the app and follow these steps:
- Log in to your account using your email and password
- Tap on “Account” on the bottom right corner
- Tap on “Investing”
- Find “Tax Documents” by scrolling down
Tax Loss Harvesting
Had a rough year, financially? Did your losses surpass your gains? You can minimize your losses by tax-loss harvesting.
So, what exactly is tax-loss harvesting? When you sell your assets, such as stocks or crypto, at a loss in order to offset a capital gain, it is known as tax-loss harvesting.
By selling your assets by the end of the year at a loss, and buying them back at the lower price, you deduct these losses from your gains and save up to $3,000 on your taxes. This is known as the “wash rule” and some speculate that there will be legislation that makes the wash rule applicable to crypto.
Who Robinhood Is For?
Robinhood has more than 13 million users with an average investor age of 31. This clearly shows that the exchange has positioned itself for the younger investors who want to get a taste of investing. Robinhood’s simplicity makes the app and website easy for investors to use and navigate. Young investors can use the platform to trade in cryptocurrencies, but the platform has also extended its features such as options trading.
The Bottom Line
Reporting tax returns can be a daunting task. But Robinhood, apart from being a great choice as a crypto brokerage, also helps you with consolidated Robinhood tax documents. This helps you streamline the entire process of tax reporting.
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Disclaimer: This material has been prepared for informational purposes only, and is not intended to provide tax, legal or financial advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.