Coinbase prompts US customers to pay taxes on crypto gains
Coinbase customers in the United States, better check your emails. There may be an Internal Revenue Service (IRS) tax form waiting for you.
On Wednesday, the San Francisco-based digital currency exchange sent out 1099-K tax forms to clients in the U.S. who have made “plenty of transactions” in 2017. On its website, Coinbase said it files the 1099-K form for customers who have made at least 200 cryptocurrency-related transactions or received at least $20,000 cash for cryptocurrency sales in a year. Qualifying customers also include “business use” accounts and GDAX accounts with sale volumes exceeding the applicable threshold.
The form does not report the customer’s actual tax payment owed to the IRS, but the aggregate, gross value of certain transactions—virtual currency-related in this case—for qualifying customers over a calendar year, according to Coinbase. Customers based in Massachusetts and Vermont will only receive a 1099-K form if the total value of their virtual currency sale is at least $600.
Accounts marked for “business use” cover those that accept cryptocurrency payments in exchange for goods and services. Mining proceeds and virtual currency transfers into a Coinbase account are excluded from the 1099-K form because they are not considered payments from customers.
“We use the best data available to us to determine whether your account activity qualifies as Business Use, including but not limited to factors such as completion of a merchant profile or enabling merchant tools,” Coinbase explained on its website.
Coinbase’s move should not come as a surprise given the results of its year-long battle to stop the tax agency from getting its hands on customer transaction records. That legal battle ended in November, when a court ruled that Coinbase had to report the personal data of 14,355 account involved in at least the equivalent of $20,000 in any cryptocurrency-related transaction during the 2013-2015 period.
Nevertheless, clients of the cryptocurrency startup are advised to consult with a tax professional to clear up any FUD related with the filing of the 1099-K form. And if you see an error in your tax form, send Coinbase the information regarding the involved transactions via their support email immediately. The IRS has given taxpayers until April 27 to file and pay their taxes.
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