Form 1099-B can make it easy to report your cryptocurrency capital gains — but it may also contain inaccurate or incomplete information about your tax liability.
In this guide, we’ll cover everything you need to know about Form 1099-B for cryptocurrency taxes. We’ll explain what you should do if you receive Form 1099-B and discuss why Form 1099-B can lead to tax reporting issues for crypto investors.
Do I have to report crypto on my taxes?
Cryptocurrency is considered property by the IRS and is subject to capital gains and ordinary income tax.
For more information, check out our
. comprehensive guide to cryptocurrency taxes What is Form 1099-B?
Form 1099-B is a tax form designed to track the disposals of capital assets. The form contains details about
, gross proceeds, and capital gains and losses. cost basis
Like other 1099 forms, Form 1099-B is issued to taxpayers and to the IRS.
Stockbrokers like Robinhood and eTrade typically send out 1099-Bs for your stock trading activity at the end of the year. However, similar reporting requirements have not been adopted by “cryptocurrency brokers”.
VIDEO Do you get a 1099-B for cryptocurrency?
As of 2021, there hasn’t been explicit guidance around what 1099s cryptocurrency exchanges should provide to customers and the IRS. As a result, different exchanges take different approaches to tax reporting.
At the time of writing, most exchanges do not issue Form 1099-B.
This will change in the near future. Cryptocurrency exchanges will be required to issue Form 1099-B starting in tax year 2023 as a result of the
. 2021 American infrastructure bill What tax forms should I receive from cryptocurrency exchanges?
Cryptocurrency exchanges may send you other versions of Form 1099 — such as Form 1099-MISC and
. Form 1099-K Does Coinbase issue Form 1099-B?
Like other major exchanges,
currently does not issue Form 1099-B to customers and the IRS. For more information, check out our guide: Coinbase Does Coinbase Report to the IRS? Which exchanges issue 1099-B?
Here are some popular exchanges that issued Form 1099-B to customers for the 2021 tax year.
Bittrex BlockFi Cash App Robinhood Uphold Do I need to include 1099-B on my tax return?
Form 1099-B is not considered an ‘entry form’. There’s no need to include it on your tax return, but you can use the information on the form to report your capital gains and losses.
What happens if I don’t report 1099-B income to the IRS?
If you don’t report taxable income that’s been reported to the IRS on Form 1099-B, it’s likely that your tax return will be flagged automatically and you will be sent a warning letter about your unpaid tax liability.
Remember, all of your cryptocurrency disposals and income are required to be reported whether they are on Form 1099 or not. The
even if they are not mentioned on these tax forms. IRS can often track your cryptocurrency transactions How do I report cryptocurrency disposals?
All cryptocurrency disposals (including those reported on a 1099-B) should be reported on
, along with a description of the property, your cost basis and gross proceeds, and the date you acquired and disposed of your assets. Form 8949
For more information, check out our
. guide to reporting your cryptocurrency taxes Why does my Form 1099-B have incomplete/inaccurate information?
Transfers between different exchanges and wallets can lead to inaccuracies on Form 1099-B. In these situations, your cryptocurrency exchange might not have data on cost basis that’s needed to calculate your capital gains and losses.
For example, consider the following scenario.
If David decides to sell his Bitcoin on BlockFi for $50,000, he should incur a capital gain of $40,000. But because BlockFi likely doesn’t know David’s original cost basis, it may report his cost basis as ‘n/a’ or ‘$0’ on 1099-B.
If David cannot prove that he originally bought his Bitcoin for $10,000, he might be on the hook for the full $50,000 of capital gain.
To avoid a scenario like this, you can use
like CoinLedger to track your cost basis across multiple exchanges and wallets. crypto tax software Report your capital gains and losses with CoinLedger
Want to report your gains and losses before the tax deadline? CoinLedger can help.
There’s no need to track your transactions manually on a spreadsheet — simply connect your wallets and let the platform do the work. With automatic integrations to exchanges like , Coinbase , Kraken Gemini and wallets like , it’s never been easier to file your crypto taxes. MetaMask
More than 250,000 investors use CoinLedger to generate comprehensive tax reports in minutes.
. Get started with a free preview report today