![]() If you sold crypto on Coinbase that was originally acquired outside of Coinbase (like if you traded crypto on a decentralized exchange) speak with your tax professional, or use a tool like CoinTracker, since Coinbase won't have information about your cost basis. It won’t include activity from other platforms or Coinbase products, like Coinbase Wallet, Coinbase Pro, or Coinbase Prime. Your gain/loss report will only include transactions you made using your Coinbase account. ![]() Whatever method you use can impact your return, so make sure to consult a tax professional before choosing a strategy. HIFO is just one way to calculate cost basis, but there are a few others. To find your cost basis, Coinbase uses an accounting method called “highest in, first out” (or HIFO) - meaning your highest-cost assets are sold first - which may result in a lower tax bill. There are a few different ways to calculate your total gains or losses. Your gains or losses can either be long term (if you held your crypto for more than a year before selling or disposing of it) or short term (if you held it for less than a year). Here’s a quick rundown of what you’ll see:įor each transaction for which we have a record, Coinbase calculates your gain or loss by taking the proceeds you received, and subtracting the cost basis (i.e., the price at which you originally bought or received your crypto). Note: for the 2021 tax year, Coinbase won’t report your gains or losses to the IRS. The reports below aren’t official IRS forms - they’re generated by Coinbase and intended to help you get started with your own calculations.Īs the name suggests, your gain/loss report is a roundup of every transaction you made on Coinbase that resulted in a capital gain or loss, like selling, spending, or converting crypto. You’ll also need to report all of your capital gains and losses when you file your taxes. While exchanges or brokers only need to report “miscellaneous income” to the IRS, your responsibility as a taxpayer doesn't end there. Even if you earned staking or rewards income below the $600 threshold, you’ll still have to report the amount on your tax return.Īt this time, Coinbase only reports Form 1099-MISC to the IRS, but since crypto tax rules are still kind of messy, you may find other IRS forms on other crypto exchanges. As a taxpayer, you’ll also need to report any taxable activities on these forms to the IRS on your tax return.ĭid you stake any crypto or earn crypto rewards this year using Coinbase? If you earned more than $600 in crypto, we’re required to report your transactions to the IRS as “miscellaneous income,” using Form 1099-MISC - and so are you. When required by the IRS, the crypto exchange or broker you use, including Coinbase, has to report certain types of activity directly to the IRS using specific forms and provide you with a copy. Crypto can be taxed in two ways: either as income (a federal tax on the money you earned), or as a capital gain (a federal tax on the profits you made from selling certain assets).
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