Forms 1099 for Cryptocurrency: A Guide

Don’t panic if you’ve received a Form 1099-MISC, 1099-B, or 1099-K for bitcoin from a crypto exchange. Learn what these forms mean for your crypto taxes.

Andrew Perlin
ByAndrew Perlin, CPAUpdated on August 25, 2022 · minute read

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Key Takeaways

  • U.S.-based exchanges will be required to send Forms 1099 beginning in 2023; however, many are doing so already.

  • Regardless of whether you receive a Form 1099 from an exchange, you need to report the details of all crypto earnings on your tax returns.

Forms 1099 for Cryptocurrency: A Guide

In November 2021, the U.S. House of Representatives passed the Infrastructure Bill, which included more stringent regulations on tax reporting for crypto exchanges. Beginning in the tax year 2023, U.S.-based crypto exchanges must collect tax reporting information from their customers so that they can send them (and the IRS) crypto  Forms 1099.[1] These tax forms report income earned from an entity or person other than an employer.

There are 20 types of 1099 forms, but the bill does not specify which type must be issued by exchanges, although the information the bill requires resembles what is collected by the 1099-B.

As of the 2021 tax year, the U.S.-based cryptocurrency exchanges that send cryptocurrency 1099s send one (or more) of the three types of forms detailed below.

What is Form 1099-MISC?

As its name suggests, Form 1099-MISC is designed for reporting miscellaneous ordinary income to the IRS. Before the 2020 tax year, it was most often used for reporting non-employee compensation. However, some crypto exchanges have begun to use this crypto 1099 to report traders’ gross income from crypto rewards or staking. This amount is typically reported in Box 3 of Form 1099-MISC, as “other income.”

Form 1099-MISC

For more information on the Form 1099-MISC, visit our blog "Does Coinbase Report to the IRS?"

Which exchanges send Form 1099-MISC?

  • Coinbase, Coinbase Pro, Coinbase Prime

  • Celsius Network

  • Gemini Earn

  • Bitstamp Earn

  • eToro (for income from staking, friend referral, or other promotional incentive)

  • Binance US

  • Crypto.com

What is Form 1099-K?

The Form 1099-K states your cumulative amount traded in a tax year: the total value of crypto that you have bought, sold, or traded on an exchange. This form is also known as a Payment Card and Third Party Network Transactions form. This cryptocurrency 1099 is  commonly used by credit card companies and payment processors like PayPal to report payment transactions that they’ve processed for third parties.

Exchanges that send Form 1099-K typically send it to U.S. traders who have made 200 or more transactions, the volume of which equals $20,000 or more.

The amount on the 1099-K does not represent your total capital gain or loss, and you don’t need to include the amounts on this document on your tax return.

Don’t be alarmed if the number on your 1099-K is a larger number than you’d expect. It’s merely a report of your trading volume to the IRS. If you trade often, you may have a very large trading volume while also not having that large of a gain or loss.

Example of the IRS Form 1099-K

Which exchanges send Form 1099-K?

What do I need to do on my crypto taxes if I get a Form 1099-K?

As is the case for many crypto tax forms, if you’ve received a Form 1099-K, so has the IRS. The form alerts the IRS that you have been trading cryptocurrency and thus you will likely be expected to report crypto on your tax return.

The 1099-K doesn’t report individual transactions, just the cumulative amount traded. You will need to report each transaction—as well as any other crypto transactions from any exchange—in order to calculate your crypto taxes. If you fail to file, you may be audited by the IRS.

What is Form 1099-B?

Form 1099-B is traditionally used by brokers and barter exchanges to report gains on a capital asset sold or exchanged on behalf of clients. Unlike Forms 1099-MISC or 1099-K, Form 1099-B does report individual transactions, detailing the following information:

  • A short description of the item sold, such as “100 shares of XYZ Co"

  • The date it was acquired

  • The date it was sold

  • How much it was acquired for

  • How much it was sold for

  • Whether the broker withheld any federal tax

Each transaction is reported separately, although trades from the same brokerage may be consolidated.

Form 1099-B often presents challenges for crypto exchanges, however, since the decentralized, easily-transferable nature of crypto can make it difficult to calculate an asset’s cost basis information.

For example, a user might transfer crypto between wallets on two different exchanges and then ultimately sell the asset on the second exchange. Although the second exchange would know the amount the crypto sold for and the date it was sold, it wouldn’t know the same information about the crypto’s acquisition. Therefore, it would be unable to determine the gains or losses a trader made on the transaction. This is where a crypto tax calculator can be a huge help for traders.

Form 1099-B

Which exchanges send Form 1099-Bs? 

  • Uphold 

  • Cash App

  • Robinhood (not an exchange, but a crypto broker)

What do I need to do on my crypto taxes if I get a Form 1099-B?

Individuals and/or their crypto tax professionals use Form 1099-B to fill out Form 8949, which is eventually filed on the taxpayer's Schedule D. Be aware, however, that because of the difficulties inherent in reporting crypto transactions, Forms 1099-B may often contain incorrect information. We recommend you speak to a crypto tax professional about how to proceed if you receive a 1099-B.

What is Form 1099-DA?

Form 1099-DA (Digital Assets) is an as-yet-unreleased form from the IRS specifically designed for cryptocurrency, but with much of the same information that you would find on a 1099-B. It was announced in response to the new reporting requirements, which go into effect for tax year 2023. Therefore, the 1099-DA should be available in 2024.[2]

For more info on crypto tax basics, visit our Crypto Tax Guide.

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

Related Content

References

Last reviewed by Andrew Perlin, CPA on August 25, 2022 · Sources

Andrew Perlin
Andrew PerlinAccounting at TokenTax
Andrew Perlin is a CPA specializing in crypto taxes. After working as a financial controller, he co-founded CryptoCPAs, which was acquired by TokenTax in 2018.

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