Does Coinbase Report to the IRS? (Updated 2023)

Does Coinbase send a 1099-B? 

At this time, Coinbase does not issue 1099-B forms to customers. 

However, this is likely to change in the near future. The 2021 American infrastructure bill requires cryptocurrency ‘brokers’ like Coinbase to issue 1099-B forms that detail capital gains and losses to customers and the IRS. 

At this time, it’s unclear when mandatory 1099-B reporting will take effect. While it was originally set to go into effect during the 2023 tax year, mandatory 1099-B reporting for crypto brokers has been delayed indefinitely.

How will Coinbase 1099-Bs impact investors like me? 

Mandatory 1099-B reporting may present problems for Coinbase customers in the future. 

Because cryptocurrency is so easily transferable, investors often move their coins between different wallets and exchanges. As a result, it’s difficult for exchanges to provide their customers with accurate tax reporting information. 

Consider the following scenario. 

In this case, David’s capital gain should be $0. 

However, Coinbase has no way of knowing David’s original cost basis. As a result, it’s likely that his cost basis will be ‘n/a’.

In this case, the burden of proof will be on David to prove that he bought his Bitcoin for $10,000. Otherwise, he may be on the hook for a capital gain of $10,000. 

Does Coinbase report small-time crypto traders? 

Coinbase will issue Form 1099-MISC to you and the IRS only if you’ve met the minimum threshold of $600 of income during the year. 

What happens if I didn’t receive a 1099 form from Coinbase? 

Even if you didn’t receive a 1099 form from Coinbase, you are required to report all of your taxable income from cryptocurrency. Not reporting your income is considered tax evasion, a crime with serious consequences. 

What does the IRS do with the information Coinbase provides? 

In the past, the IRS has used the information from 1099 forms to send warning letters to Coinbase users. It’s reasonable to assume that discrepancies between Form 1099 and a taxpayer’s return can increase the risk of a cryptocurrency tax audit. 

Does Coinbase report to the IRS if you didn’t sell? 

If you did not have taxable income during the year, it’s unlikely that Coinbase will report your cryptocurrency activity to the IRS. Simply holding cryptocurrency or transferring it between wallets you own is not considered a taxable event. 

Still, it’s important to note that there are some situations where you may incur a tax liability even if you don’t ‘cash out’ to fiat currency. Two examples are earning cryptocurrency interest and trading your crypto for another cryptocurrency. 

When will Coinbase send a 1099 form? 

If you’ve met the requirements for receiving Form 1099-MISC from Coinbase, you’ll receive it by the end of February of the following year at the latest. 

How to access my Coinbase tax forms 

If you’re looking for a copy of your Coinbase transactions for your own records, you can download a csv file by logging in to Coinbase on desktop, then clicking ‘Taxes’ on the left-hand side. 

Next, click the ‘Statements’ tab. 

Hare, you can input your preferred date range and download a record of your crypto transactions. 

Alternatively, you can connect your Coinbase account to CoinLedger to automatically import your transactions and handle all of your tax reporting!

How crypto tax software can help

Cryptocurrency tax software like CoinLedger can help take the stress out of your tax season. The platform automatically connects with exchanges like Coinbase and blockchains like Ethereum to help you report your taxes in minutes!

Sign up for an account for free, import all of your historical trades and transactions, and automatically generate tax forms like 8949 with the click of a button. The whole process takes around 15 minutes! 

Get started with a free preview report today. 

Frequently asked questions 

Let’s cap off our discussion by answering a few frequently asked questions about Coinbase taxes. 

Do I pay taxes on Coinbase transactions?

Coinbase transactions may be subject to capital gains or income tax depending on the specific nature of the transaction. 

How do I avoid Coinbase taxes? 

There is no way to legally evade taxes on your Coinbase transactions. However, strategies like tax-loss harvesting can help you legally reduce your tax bill. 

Will Coinbase send me a 1099? 

Currently, Coinbase sends Form 1099-MISC to customers who are based in the United States and earned at least $600 of income on the platform. 

Do all crypto exchanges report to the IRS? 

It’s likely that major exchanges like Coinbase will be required to issue 1099-B forms to customers and the IRS in the near future because of the passage of the 2021 infrastructure bill. 

Can the IRS see my crypto wallet? 

It’s likely that the IRS is closely monitoring transactions on blockchains like Bitcoin and Ethereum. In the past, the IRS has partnered with contractors like Chainalysis to analyze the blockchain and match ‘anonymous’ wallets to known individuals. 

‍This post is for informational purposes only and should not be construed as tax or investment advice. Please speak to your own crypto tax expert, CPA or tax attorney on how you should treat taxation of digital currencies.