Does Uphold Report to the IRS?

Zac McClure
ByZac McClure, MBAReviewed byAlex MilesUpdated on January 18, 2024 · minute read
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  • Uphold issues 1099 forms (B and MISC) to users with certain activity thresholds. It's essential to accurately report all your crypto activity to the IRS or the respective authority in your region.

  • Users can download transaction history for their Uphold transactions, which we cover in this article. Our crypto tax experts are available to assist with all your crypto tax filing, including Uphold.

Does Uphold report to the Internal Revenue Service (IRS)?

Yes, Uphold reports cryptocurrency activities to the IRS. For US-based users wondering does Uphold report to the IRS - Uphold issues 1099 forms, ensuring that both users and the IRS receive detailed information about taxable transactions. This commitment aligns with regulatory requirements, contributing to transparency in tax reporting.

Revisions to US tax laws under the Infrastructure Investment and Jobs Act have heightened the reporting obligations within the cryptocurrency sector. Understanding Uphold's reporting practices will help users to navigate tax obligations effectively. Uphold's adherence to IRS reporting standards reinforces its commitment to regulatory compliance and provides users with the necessary documentation for accurate tax filings.

Form W9, a concise IRS Tax information document, mandates completion by every US individual (or US resident alien) engaging in transactions on our platform. This step is essential to validate their accurate details, including name, address, and taxpayer identification number (TIN).

Compliance with this protocol is obligatory for all customers classified as US Persons or US resident aliens. Per Uphold, failure to submit an Uphold W9 with a certified TIN will result in the restriction of the customer's account until the matter is resolved.

Will Uphold send me a 1099?

Because Uphold reports to the IRS, eligible Uphold users in the US can expect to receive a 1099 form from Uphold. The issuance of 1099 forms, specifically 1099-B and 1099-MISC, will depend on the nature of your investment activities. 

Users who have sold or traded cryptocurrency on Uphold may receive a 1099-B, while those with $600 or more in income from activities like staking rewards, referrals, and bonuses will likely receive a 1099-MISC. Matching copies are typically also sent to the IRS.

By providing these tax forms, Uphold empowers users to fulfill their tax obligations accurately. We recommend users stay informed about Uphold's tax reporting practices and promptly access their 1099 forms when available for seamless crypto tax preparation.

Do I have to pay taxes on my Uphold transactions?

From capital gains on crypto sales to income generated through staking and airdrops, users should understand that Uphold transactions will typically be taxed just like regular crypto transactions. For US users, crypto activity on Uphold is subject to Internal Revenue Service (IRS) guidelines, in which cryptocurrencies are considered property. 

Consequently, US users are obligated to pay capital gains tax upon selling crypto tokens for a gain, dependent on the fluctuation in token value since acquisition. Moreover, any receipt of cryptocurrency, whether through staking rewards, airdrops, or other means, is typically treated as ordinary income based on the fair market value of the received tokens.

International crypto users can refer to our helpful country guides for guidance in regions outside of the US.

How is my Uphold debit card taxed?

For users leveraging Uphold's debit card, understanding the tax implications is crucial. Here we’ll look briefly into the tax treatment of transactions made using the Uphold debit card, which we feature in our article about the best crypto debit cards. The Uphold debit card offers rewards in both USD and other crypto tokens.

Notably when you use a Bitcoin or other crypto debit card to make a purchase with crypto, this technically means you are converting your cryptocurrency into USD during the purchase. According to the IRS, this crypto-to-fiat transaction is itself a taxable event. If the crypto you use is higher in price when you dispose of it (e.g., make your purchase) than when you receive it, you'll probably owe capital gains tax.

Presently, there are no explicit IRS guidelines on the taxation of crypto debit card rewards, and earnings from debit card purchases are generally considered non-taxable rebates. As the regulatory landscape evolves, it's crucial to stay informed about updates to the taxation of crypto debit card activity. When in doubt, consult one of our crypto tax professionals for guidance.

How TokenTax can help

TokenTax is your comprehensive solution for all crypto tax needs, offering a crypto tax calculator and full-service accounting firm that ensures accurate and complete filing, regardless of your trading activities or location. With seamless data import, TokenTax synchronizes with all your wallets and accounts, reducing manual data entry. It supports API and wallet integrations, including DeFi and NFT support, as well as margin and futures trading. 

Our platform helps you easily identify and address errors or missing data. Preview your tax liability in real-time with tax reports featuring various calculations like FIFO, LIFO, Minimization, and average cost. The tax loss harvesting dashboard, mining and staking income reports, Ethereum gas fee reports, and custom enterprise reports provide a comprehensive view. TokenTax automatically generates every tax form needed, including Form 8949, Schedule D, FBAR, and international forms, with the option for TurboTax integration and a full filing add-on. 

For investors with more complex needs, TokenTax offers advanced reconciliation services handled by crypto-savvy tax professionals, capable of managing situations involving missing cost basis, high transaction volume, cross-chain transactions, and enterprise solutions.

In short, TokenTax's seamless data sync with Uphold and other accounts, along with support for various transaction types, including DeFi and NFT activities, gives crypto users a total solution for their crypto tax needs.

Schedule a FREE crypto tax consultation

Uphold exchange IRS reporting FAQs 

Here are answers to frequently asked questions about the Uphold exchange, including does uphold report to the IRS and Uphold W9.

Is Uphold legal?

Yes, the Uphold exchange operates legally in the US. Utilizing Uphold involves converting cryptocurrency into USD, which, according to the IRS, is a taxable event. Therefore, users should be aware of potential tax implications, particularly when using features like the Uphold debit card. Uphold operates within legal frameworks, and its legality is contingent on users complying with relevant tax regulations associated with crypto transactions.

How do I avoid Uphold taxes?

To avoid crypto taxes, users can consider several legal strategies to minimize their tax liability. These include engaging in crypto tax loss harvesting, utilizing accounting strategies like HIFO/TokenTax minimization, donating or gifting crypto to non-profit organizations, aiming for long-term capital gains, or simply holding onto crypto assets without selling. 

Additionally, users can explore using crypto tax software, harvesting crypto losses, holding assets long-term for lower capital gains tax rates, taking profits during low-income years, giving crypto gifts, donating crypto to tax-exempt organizations, buying and selling crypto via retirement accounts (IRA or 401-K), taking out crypto loans, considering relocation to a crypto tax-free country, keeping meticulous records of transactions, and seeking professional assistance from a crypto tax professional.

What crypto wallet does not report to the IRS?

While crypto wallets interact with publicly visible blockchains, it's crucial to understand that the IRS can potentially trace transactions to individuals. The degree of anonymity depends on the wallet and transaction nature. It’s best to assume the IRS has full transparency into your crypto activities and to act accordingly.

Although certain wallets can provide a certain level of privacy, it's important to note that the IRS has mechanisms to track activities, especially when using centralized crypto exchanges like Coinbase. The IRS receives information from such exchanges, making it challenging to avoid reporting completely.

We always strongly recommend absolute compliance and transparency in crypto transactions. Using wallets that align with regulatory standards and using reputable exchanges can contribute to responsible and legal crypto activities. When in doubt, our crypto tax professionals like ours at TokenTax can assist.

Why can’t Uphold provide me a complete tax report?

Uphold's inability to offer a complete crypto tax report may stem from various factors. Uphold operates within legal and regulatory frameworks, which may limit the extent of information available for tax reporting. Additionally, the complexity of crypto transactions, diverse financial activities, and evolving regulations can contribute to challenges in generating comprehensive tax reports.

Users are encouraged to explore alternative solutions, such as connecting Uphold with crypto tax software like ours at TokenTax, to enhance the accuracy and completeness of their tax reporting. Seeking professional advice and utilizing specialized tools can assist users in navigating the complexities of tax obligations associated with Uphold transactions.

To stay up to date on the latest, follow TokenTax on Twitter @tokentax.

Zac McClure
Zac McClureCo-Founder & CEO at TokenTax
Zac co-founded TokenTax after his career in international finance and accounting at JPMorgan, Imprint Capital and Bain. He has worked in more than half-dozen countries and received his MBA from the UPenn Wharton School.
Alex Miles
Reviewed byAlex MilesCo-Founder at TokenTax
Prior to TokenTax, Alex worked as a Product Designer at Dropbox and before that Readmill (acquired by Dropbox). He holds a BS in Digital Information Design - Interactive Media from Winthrop University.

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