Did you sell Bitcoin on Cash App this year?
If the answer is yes, it’s likely that you have a tax liability to pay. Unfortunately, exchanges like Cash App don’t always have the ability to provide you with accurate crypto tax forms. That means the burden for accurately reporting your taxes falls onto you.
In this article, we’ll explain how your Bitcoin transactions on Cash App are taxed and break down a simple 4-step process to reporting your Cash App transactions on your tax return.
Cash App was launched by the payments company Square back in 2013. Since then, Cash App has become one of the most popular payments apps in the United States, boasting more than 70 million users in 2021.
Cash App offers a host of different financial services to its users, including peer-to-peer transactions, stock trading, and debit card offerings. Since 2018, the app has allowed users to buy, sell, and transfer Bitcoin.
In the United States, cryptocurrency is taxed as property, just like stocks or real estate.
When you dispose of cryptocurrency, you’ll incur capital gains or losses depending on how the price of your cryptocurrency has fluctuated since you originally received it. Selling your cryptocurrency on Cash App is considered a disposal event.
For more information, check out our complete guide to cryptocurrency taxes.
Currently, Cash App provides a 1099-B to any user that’s sold Bitcoin in the past year. This form reports gross proceeds from your Bitcoin sales.
However, the form often leaves the Cost Basis field of 1099-B completely blank. If you ever transferred bitcoin into or out of Cash App, it’s likely you will have blank Cost Basis fields on your Cash App 1099-B. This is problematic when it comes to tax reporting because cost basis information is necessary for calculating your gains and losses.
Yes. Any 1099-B form that is sent to a Cash App user is also sent to the IRS.
Remember, there is no legal way to evade cryptocurrency taxes. Not filing your cryptocurrency taxes is considered tax fraud and is punishable through a maximum penalty of $100,000 and potential jail time.
Cash App’s website states the following.
Cash App only provides records of your bitcoin transactions on Cash App. If you trade cryptocurrencies on other exchanges you will need to obtain transaction and tax information from them.
This approach to tax reporting is not unique to Cash App — most cryptocurrency exchanges follow similar policies.
Because of the peer-to-peer nature of cryptocurrency, investors often transfer their holdings to different exchanges and different wallets. Unfortunately, that makes it difficult for exchanges to provide complete tax reports since they don’t have access to customer transactions that take place on different platforms.
Luckily, there is an easy way for crypto investors to file their taxes: leveraging crypto tax software. With CoinLedger, you can get a complete record of your crypto gains and losses across different exchanges and easily generate a tax report.
Here’s how you can report your Cash App taxes in minutes using CoinLedger.
Login to Cash App from a computer.
Click ‘Statements’ on the top right-hand corner.
Click Export CSV
Navigate to the Cash App tab on CoinLedger and upload your CSV file.
And that’s it! If you’re using other cryptocurrency exchanges, you can import all of your transactions into CoinLedger. Once you’re finished, you’ll be able to generate a complete tax report with the click of a button.
Don’t wait until the deadline to file your taxes. Join the 300,000+ investors who use CoinLedger to file their Bitcoin and cryptocurrency taxes today.