Coinbase makes it easier to pay taxes on cryptocurrency gains
Paying taxes on Coinbase cryptocurrency profits is a little simpler with the site’s new tax tool.
With a month to go before the income tax filing deadline, popular cryptocurrency exchange Coinbase is helping taxpayers simplify their capital gains calculations. Coinbase just released a new report that automatically calculates gains and losses according to a common IRS accounting method.
For cryptocurrency traders with numerous transactions in 2017, the tool sorts through multiple buy and sell orders to figure out both the cost basis of purchases and the gains or losses by using the first-in-first-out calculation methodology.
Formally called the Gain/Loss Calculator, the tool can make preparing to file an income tax return a lot less work – as long as all cryptocurrency transactions were conducted on Coinbase.
However, Coinbase is just one of dozens of cryptocurrency exchanges available to traders, and it currently only supports buying and selling four coins: bitcoin, Ethereum, Bitcoin Cash and Litecoin. Taxpayers who used other exchanges will need to perform similar calculations for the cryptocurrencies they bought and sold in 2017, whether or not the exchange they used offers a way to generate simplified gain/loss reports.
And because cryptocurrencies are a relatively new phenomenon, it is recommended you consult a tax professional about how best to treat crypto gains or losses for your specific tax situation.
The IRS has already pursued the Coinbase records of half a million users to check up on taxpayers, though an ensuing legal battle cut that number to 14,000.
To get started with the basics of how the US tax authority treats cryptocurrency ownership, how the capital gains tax works and how to calculate your crypto taxes in just three steps, plus other frequently asked tax questions, check out our guide to cryptocurrency taxes.
And for help with the rest of your income tax filing, take a look at our guide to filing online.
Disclosure: At the time of writing, the author holds XRP, CND, ANT and DRGN, and actively trades BTC and ETH.