Start by keeping detailed records, staying updated on regulatory developments, and consulting tax professionals who understand the evolving crypto landscape. The IRS also issued guidance in 2023 that may support claims of loss for worthless or abandoned assets, though you xcritical cheating should speak with a tax advisor about how best to apply these rules. You can automatically import your Coinbase Pro transactions using an API connection or import them manually through a CSV file. Coinbase Wallet gives users control over their private keys, allowing them to safely store, transfer, and transact with cryptocurrency and NFTs.
What is the Coinbase gain/loss form?
Going forward, discrepancies between your self-reported transactions and third-party reports may trigger IRS inquiries. This matters because gains from the sale of collectibles are subject to a maximum 28% capital gains tax rate, which is higher than the typical long-term capital gains rate for other assets. Starting in 2027, certain digital wallet providers will be required to collect Know Your Customer (KYC) information and issue Form 1099-DA to users and the IRS. At this time, it’s not yet clear whether Coinbase Wallet will be required to comply with these rules.
You Must Answer the “Digital Asset” Question on Your Tax Return
TurboTax goes further than any other app, offering comprehensive Q&As and more—and more understandable—guidance than competitors. If you have more than that, TurboTax recommends using a tax aggregator like Bitcoin.Tax, CoinTracker, or CryptoTrader. You can also import directly from many financial services like Ethereum, Fidelity Investments, and Robinhood.
If you’re a US taxpayer and have been using cryptocurrency but not paying taxes on any gains from it, you’re not alone. You’re also not compliant with IRS regulations, which could catch up to you someday. The agency might penalize you unless you can prove „reasonable cause.“ Want to get started managing your taxes on Coinbase Pro and other exchanges?
Is Cryptocurrency Property?
Coinbase Pro can give you all the details you need to trade like a dedicated crypto trader, but it can only help with some of your crypto tax reporting. You can use cryptocurrency to pay for goods or services, invest, or simply exchange funds with someone else, whether for other cryptocurrencies or traditional currency. Let’s first make sure we’re on the same page when it comes to crypto tax prep. Although this requirement is not mandatory for the 2024 tax year, some platforms have already begun issuing 1099 forms voluntarily.
Filing the right crypto form accurately is the best way to prevent issues later. At TokenTax, we create original content to educate and empower the many crypto investors we serve. Our informational articles reflect the latest tax guidelines from agencies worldwide and are regularly updated to be accurate, actionable, and current. Certified tax professionals research, write, and review each piece to combine industry expertise with rigorous fact-checking. Whether you’re navigating DeFi, NFTs, or complex trades, TokenTax is your trusted partner in the complex, evolving world of crypto taxes.
However, Coinbase has no way of knowing David’s original cost basis. As a result, it’s likely that his cost basis will be ‘n/a’ on Form 1099-DA. It’s possible that your gain/loss form will be inaccurate if you’ve transferred crypto into or out of Coinbase (more on this below). Coinbase issues Form 1099-B to customers who’ve done futures trading on the platform. Currently, Coinbase issues Form 1099-MISC to customers who’ve earned $600 or more of income through staking, interest rewards, and Coinbase Learn and Earn rewards.
CoinLedger can aggregate your transactions across different wallets and exchanges to help you easily report your cryptocurrency taxes. Coinledger is a cost-effective way of filing crypto taxes without manually inputting transactions into your tax forms. The software integrates with major exchanges and wallets using APIs or public wallet addresses, automatically importing transaction data.
Records to keep to fill out your crypto tax form correctly
Unfortunately, keeping track of your taxes on your own can be difficult. Because transferring crypto between different wallets and exchanges is so common, it can be difficult to find information on cost basis needed for tax reporting. Coinbase Wallet transactions are subject to capital gains and ordinary income tax, just like all other cryptocurrency transactions. Because Form 1099-K was designed for payment processors and xcritical website not cryptocurrency exchanges, the form shows gross transaction volume instead of gains. The tax forms seemed to show that investors who had accurately reported their taxes had severely underreported their tax liabilities. Starting in 2026, Coinbase and other major exchanges will be required to issue Form 1099-DA to all customers — a similar form designed to report gains and losses from digital assets specifically.
Calculate Your Crypto Taxes
- Digital assets are no longer a fringe topic; they are increasingly mainstream financial instruments with complex and unique tax implications.
- If you’ve met the requirements for receiving Form 1099-MISC from Coinbase, you’ll receive it by the end of February of the following year at the latest.
- Self-custody wallets don’t always have access to your complete crypto transaction history — meaning that they don’t have access to the data they need to accurately calculate capital gains and losses.
- Try CoinLedger, the platform used by more than 400,000 crypto investors around the world.
If you use additional cryptocurrency wallets, exchanges, DeFi protocols, or other platforms outside of Coinbase Wallet, Coinbase Wallet can’t provide complete gains, losses, and income tax information. It’s important to remember that this form alone is not enough to report your taxes. The 1099-MISC is meant to help users report miscellaneous income from rewards, but it does not show every taxable event — such as your capital gains and losses from cryptocurrency disposals. You can generate your gains, losses, and income tax reports from your Coinbase Pro investing activity by connecting your account with CoinLedger. Connect your account by importing your data through the method discussed below.
Get a personalized crypto tax consultation.
Find Coinbase Pro in the list of supported exchanges and select the import method you prefer. Our content is based on direct interviews with tax experts, guidance from tax agencies, and articles from reputable news outlets. If you’re looking https://xcritical.online/ for a copy of your Coinbase transactions for your own records, here’s how you can get started. In this case, the burden of proof will be on David to prove that he bought his Bitcoin for $10,000. If you’ve met the requirements for receiving Form 1099-MISC from Coinbase, you’ll receive it by the end of February of the following year at the latest. Experts believe that mandatory 1099-DA reporting will lead to more warning letters and more audits.
Red Alert: Why You Need to Fix Your Crypto Taxes Right Now
If you’ve used Coinbase for crypto transactions, retrieving your 1099 form and properly reporting your taxable events is crucial for tax compliance. Even if Coinbase doesn’t issue you a 1099, you are still responsible for reporting capital gains and other taxable income. Staying organized throughout the year will make tax season much smoother. You can generate your gains, losses, and income tax reports from your Coinbase Wallet investing activity by connecting your account with CoinLedger. Once you’ve connected your other wallets and exchanges, you’ll be able to generate complete crypto tax forms in minutes.
The crypto tax attorneys and accountants at Gordon Law are here to make your Coinbase tax reporting seamless and accurate. Save time, money, and stress by working with us this upcoming tax filing season. The process involves listing each trade or sale on separate lines, noting dates, proceeds, cost basis, and any necessary adjustments. Discrepancies happen if your exchange doesn’t track transfers correctly or lacks cost basis data from external wallets. You can correct the numbers on your return or, if needed, reach out to the exchange for amendments.
It also identifies investments to sell at a loss to reduce your tax bill. Many cryptocurrency investors use additional exchanges, wallets, and platforms outside of Coinbase Pro. The trouble with Coinbase Pro’s reporting is that it only extends as far as the Coinbase Pro platform. If you use additional cryptocurrency wallets, exchanges, DeFi protocols, or other platforms outside of Coinbase Pro, Coinbase Pro can’t provide complete gains, losses, and income tax information. Many cryptocurrency investors use additional exchanges, wallets, and platforms outside of Coinbase Wallet. The trouble with Coinbase Wallet’s reporting is that it only extends as far as the Coinbase Wallet platform.
If you did not have taxable income during the year, it’s unlikely that Coinbase will report your cryptocurrency activity to the IRS. Simply holding cryptocurrency or transferring it between wallets you own is not considered a taxable event. At this time, Coinbase doesn’t provide a record of your gains and losses to the IRS. However, Coinbase will likely begin reporting these transactions to the IRS starting in the 2025 tax year — when the crypto provisions of the infrastructure bill are scheduled to go into effect.
