Learn everything you need to know about crypto tax in our Cryptocurrency Tax Guide
Does Coinbase report to the IRS?
The answer: Yes, Coinbase reports to the IRS. Currently, Coinbase sends Forms 1099-MISC to U.S. traders who made more than $600 from crypto rewards or staking in the last tax year.
The exchange sends two copies of Form 1099-MISC: One to the taxpayer and one to the IRS. Thus, if you have received a 1099-MISC from Coinbase, so has the IRS—and they’ll be expecting you to file taxes on your cryptocurrency transactions.
What’s more, although the Form 1099-MISC only reports profits from rewards or staking, it signals to the IRS that a taxpayer is actively trading cryptocurrency and may have transactions other than rewards or staking to report.
What information has Coinbase shared with the IRS in the past?
In the 2018 and 2019 tax years, Coinbase issued Form 1099-K to customers with at least 200 orders during the year, with the total value of those orders equal to or greater than $20,000. However, it discontinued this practice after the form led the IRS to mistakenly believe many traders had under-reported earnings.
Additionally, in December 2016, the IRS issued a summons to Coinbase, asking for records of ~500,000 Coinbase customers. These records include cryptocurrency traders' personal information and cryptocurrency transactions.
Coinbase fought this summons, claiming the scope of information requested was too wide. After Coinbase petitioned the IRS, the order was changed to only be for a more narrow scope of information from only ~13,000 users. On 23 February, 2018, Coinbase informed these users that they were providing the following information to the IRS:
Taxpayer ID number
Transaction logs, post-transaction balance, names of parties in the transaction
What does the IRS do with the information provided by Coinbase?
In recent years, the IRS has increased their enforcement and auditing of cryptocurrency taxation. They are sending letters 6173, 6174, and 6174-A as well as even CP2000 notices. Previous years’ 1099-K and current 1099-MISC data helps the tax agency identify filers who may be failing to report or under-reporting.
What do I need to do if I receive a 1099-MISC from Coinbase?
The 1099-MISC doesn’t report individual transactions from staking or rewards, just your total income from them. You will need to report the details—as well as any other crypto transactions from any exchange—in order to calculate your crypto taxes. For more information on the 1099-MISC visit our help article about cryptocurrency 1099s.
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