Cryptocurrency exchange Coinbase sends customers tax forms
Have you made 200 or more virtual currency sale transactions to the tune of $20,000 in a calendar year?
Digital cryptocurrency exchange Coinbase has distributed necessary end of year tax documents, via email, to a number of its customers in the United States to assist with voluntary taxation compliance.
Coinbase sent out Form 1099-K to qualifying customers. In the US, this includes traders that have engaged in 200+ virtual currency sale transactions whose total value is equal to or greater than $20,000 in a calendar year.
You would have received a form on or before January 31 if your exchange account is operated for business use or your GDAX sale volumes exceed the applicable thresholds. GDAX is Coinbase’s digital exchange. For these users, a single “sale transaction” is effected each time you execute a virtual currency sale order on GDAX.
An account is considered “business use” if you accept digital currency payments in exchange for the provision of goods and/or services. Coinbase determines account uses by analyzing factors such as completion of a merchant profile or enabling of merchant tools. Users’ wallet to wallet digital currency transfers are not taxable.
The Form 1099-K are distributed by a third party software system, Track1099.com. The company processes the forms and forwards the completed documents to customers. These contain a secure link to view the forms. Customers will be required to verify the last 4 digits of their social security number or employer identification number in order to access the link. Traders should ensure that the information listed is complete and accurate.
Coinbase also provides a separate copy of clients’ forms to the IRS.
What is a Form 1099-K?
Form 1099-K is an information return that is filed by certain third-party payment network providers with the Internal Revenue Service (IRS). The form reports the aggregate, gross value of certain transactions for qualifying customers over a calendar year. The form does not report your actual tax payment owed to the IRS.
It reports the gross proceeds from virtual currency sales transactions to the IRS. The volume reported on the form does not represent gain or loss of virtual currency sales and doesn’t indicate tax liability. Coinbase provides a transaction reporting tool (in beta) that summarizes users’ virtual currency purchases and sales.
An improved version of this tool is due to arrive in February 2018.
The rules are different for residents of Massachusetts or Vermont. Business use or GDAX customers will be emailed a Form 1099-K is the total value of qualifying sales transactions is equal to or greater than just $600.
If you believe the information on your 1099-K Form is inaccurate or you wish to dispute the figures, Coinbase requests that customers submit updated information by contacting firstname.lastname@example.org via email.
The South Korean government will reportedly begin enforcing corporate tax legislation on local cryptocurrency exchanges from the end of March 2018, according to a spokesperson for the Ministry of Strategy and Finance.
It’s important to understand your income tax bracket in order to file your tax return online quickly and easily.