Coinbase Pro sent me a 1099-K. What do I do now?
The day has come. Your crypto exchange has sent you a tax form. But chances are, this is no big deal. Coinbase Pro did the same thing last year, and Gemini has sent out 1099-K forms as well. If you have 200+ transactions and $20,000+ cumulative transaction volume (for most states) on Coinbase Pro for the tax year of 2018, you have likely received a 1099-K — both by email and by a hard copy sent to your listed address.
Only Coinbase Pro, Prime, and Merchant users can receive this form. Coinbase is not required to issue a 1099-K for users of their Coinbase.com platform. 1099-K or not, it’s still necessary to report taxes on your crypto transactions.
A 1099-K is also known as a Payment Card and Third Party Network Transactions form. It’s commonly used by credit card companies and payment processors like Paypal to report payment transactions that they've processed for third parties.
The form represents your total cumulative transaction value, including transfers in and out of Coinbase Pro, so don’t be alarmed if the number is much larger than you’d expect. This cumulative transaction amount given by the 1099-K does not represent your total gain/loss or any cost basis or proceeds, and it does not to need to be included on your return.
As is the case for many tax forms, if you’ve received a 1099-K, so has the IRS. From this, the IRS knows for sure that you have been trading cryptocurrency.
The 1099-K is more of an informational form for the IRS than it is a tax form. The IRS swore in new commissioner Charles Rettig late last year, and he’s stated regarding crypto, “It is information data currency that the IRS has and will have more information about than you could ever imagine.” This clear message regarding crypto tax enforcement coupled with Coinbase Pro’s required 1099-K makes the IRS’s stance on crypto taxation clear: you need to report crypto taxes.
What action do you need to take?
The 1099-K doesn’t report individual transactions and capital gains. You still need to file your schedule D 1040 with a 8949 to report capital gains as you would normally do with crypto. You are responsible for reporting all crypto transactions — from all exchanges.
TokenTax can help you report your crypto taxes. We connect to your exchanges, process all your transactions, calculate your tax liability, and generate the right tax forms for you. If you were at all nervous about receiving this tax form from your exchange, don’t be! We make crypto tax easy.
Want to read up more on Coinbase’s 1099-K? Check out Coinbase Pro’s FAQ on 1099-K tax forms here.
TokenTax does the hard work so you don’t have to.
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