Does Coinbase Report to the IRS?
As cryptocurrency continues to grow in popularity, many people are turning to platforms like Coinbase to buy, sell, and manage their digital assets. And, as with any financial transaction, questions arise about reporting to the Internal Revenue Service (IRS).
The short answer is yes, Coinbase is required to report certain transactions to the IRS. In fact, in 2018, Coinbase was forced to turn over the records of over 13,000 customers to the IRS, after a legal battle that lasted for over a year.
So what transactions are reported to the IRS, and how does Coinbase go about doing it? For starters, any time you sell cryptocurrency on Coinbase, the platform will generate a Form 1099-K if you have exceeded certain transaction thresholds: $20,000 in sales and 200 transactions in a calendar year.
The 1099-K form reports your gross proceeds from the sales of your cryptocurrency. This means that Coinbase reports the total amount of money you received from selling your cryptocurrency, before any fees or expenses.
In addition, Coinbase is also required to report your cryptocurrency holdings if they exceed $10,000 at any point during the year. This is done using a Form 8938, which is filed alongside your tax return.
It’s important to note that these reporting requirements only apply to U.S.-based customers of Coinbase. If you reside in another country, you will need to check your local tax laws to determine what reporting is required.
It’s also worth noting that while Coinbase is required to report certain transactions to the IRS, they are not responsible for calculating your taxes owed. It’s up to the individual investor to keep track of their own gains and losses, and report them accurately on their tax return.
In summary, Coinbase does report certain transactions to the IRS – namely, any sales of cryptocurrency that exceed certain thresholds and any crypto holdings that exceed $10,000 – but it’s up to the individual investor to accurately report their taxes owed based on their own gains and losses. If you’re unsure of how to report your cryptocurrency transactions, it’s always best to consult with a tax professional or seek guidance from the IRS directly.