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Home Cryptocurrency news Bitcoin

Coinbase Pro Issues Tax Form 1099K: What Does This Mean for Crypto Investors?

Tony Spilotro by Tony Spilotro
12 months ago
in Bitcoin, Cryptocurrency news
Reading Time: 3min read
crypto coinbase 1099k 1099 tax irs
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Crypto investors across the United States began receiving their 1099K tax documents from cryptocurrency exchange Coinbase Pro this week.

But what does the form actually mean for crypto investors, and what actions need to be taken, if any?

Clarifying the 1099K Tax Form From Coinbase Pro For Crypto Investors

It’s tax season once again in the United States, and that means its time to take out our calculators, load up the tax software, or pay a visit to a certified public accountant to make sure all income, gains, and losses are properly reported to the Internal Revenue Service.

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Failure to report properly can lead to fines or jail time.

And for the first time in history, the IRS has added a question directly asking if the taxpayer has at all transacted in cryptocurrencies like Bitcoin and Ethereum.

This is why crypto investors are especially anxious after receiving their 1099K tax form from Coinbase Pro.

Related Reading | Wealth and Tax Advisor Says IRS May Be Targeting Crypto Traders, Not Investors 

However, there’s no cause for concern. The 1099K is a standard tax document that tells the taxpayer what information needs to be provided to the IRS.

Each 1099K tax form indicates the total amount transacted on the platform and does not indicate total gains or losses.

To find that number, trade-by-trade accounting must be performed and tabulated to find the total sum of all gains and losses.

Using a third-party service like Bitcoin.tax makes things a lot easier to find these important figures, as Coinbase’s API can connect with the service to automate the accounting process.

Crypto investors with only a limited amount of trades in a year simply need to find the total sum of all gains or losses. Taxes are only paid on any gains, not the full amount of the crypto held.

Tax is also paid at a different rate, depending on how long the assets are held. Assets held over a year or more are subject to long-term capital gains tax, while assets bought and sold within a year are subject to short term capital gains rates.

Those with an extensive number of cryptocurrency trades may need to report their earnings as income, according to some interpretations of tax laws.

Related Reading | If This Is You, You May Not Need to Report Crypto Tax Gains to the IRS 

The most important thing is to be sure to report something if crypto-assets were held during the year. The IRS may be applying pressure to crypto traders and investors, however, according to experts, they’re mainly looking for taxpayers to self-report, and will be lenient if any reporting is done incorrectly.

Cryptocurrency related tax laws are confusing, and given the gravity of the situation, consulting with a certified public accountant or using tax software like Bitcoin.tax is recommended to help take some of the fear, uncertainty, and doubt out of tax season.

Tags: 1099kcoinbasecryptotaxes
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a digital media executive and global remote work leader with a decade of content experience and excellent. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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