For the 2020 tax 12 months, Coinbase is planning to concern a brand new tax kind (1099-MISC) and abandon the Type 1099-Ok which created a tax nightmare for a lot of taxpayers.
Based on a quick assist article revealed on Coinbase Tax Useful resource Heart, 1099-MISC Types will probably be issued to US Coinbase clients who’ve acquired $600 or extra in cryptocurrency by means of Coinbase Earn, USDC rewards and/or staking revenue throughout 2020.
Previous to this alteration, Coinbase has been issuing Type 1099-Ks to US customers who had greater than 200 transactions and $20,000 in quantity in any given 12 months. This tax kind solely reported gross proceeds for the person and omitted important price foundation info which was important to precisely calculate your capital acquire taxes. Lack of know-how on how you can precisely report this type on taxes result in some recipients receiving IRS CP2000 tax notices and overpaying crypto taxes.
Right now it’s unclear whether or not Coinbase will report common cryptocurrency buying and selling exercise (cashing out crypto and exchanging one cryptocurrency with one other) on Type 1099-MISC. If this had been to occur, a considerably larger variety of customers will obtain this new tax kind in comparison with the outdated 1099-Ok kind. It’s because the the edge for issuing a Type 1099-MISC ($600 or larger) is decrease than the Type 1099-Ok (200 transactions and $20,000 in quantity).
Lastly, whether or not you obtain a tax kind or not, it’s your accountability to report your positive aspects and losses from cryptocurrency buying and selling in your taxes.
Disclaimer: This submit is informational solely and isn’t supposed as tax recommendation. For tax recommendation, please seek the advice of a tax skilled