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In the past, Coinbase issued Form 1099-K to customers and the IRS. After 2020, the company changed its tax reporting policies.
In this article, we’ll break down everything you need to know about Coinbase 1099-K forms. We’ll explain the reason why Coinbase stopped sending these forms and detail how the company currently handles tax reporting.
How Do I Report Crypto Income on My Taxes?
Before we dive into Coinbase tax reporting, let’s break down the basics of cryptocurrency taxation.
Capital gains: When you dispose of your cryptocurrency, you’ll incur a capital gain or loss depending on how the price of your crypto has fluctuated since you originally received it. Examples of disposals include selling your cryptocurrency for fiat or trading your cryptocurrency for other cryptocurrencies.
Ordinary income: If you earned cryptocurrency as income (whether from mining, staking, or interest accounts), you’ll recognize ordinary income based on the fair market value of your coins at the time you received them.
To learn more about how cryptocurrency is taxed, check out The Complete Guide to Crypto and Bitcoin Taxes.
What is Form 1099-K?
Form 1099-K is commonly used by credit/debit cards and other payment settlement networks. The form shows the IRS the transaction volume of your processed payments.
Instead of reporting gains and losses (which are the real numbers you need for crypto tax reporting), Form 1099-K sums up all of your trades that happened within your account and reports that number to the IRS. As a result, Form 1099-K issued by Coinbase in the past made it seem as if customers had large amounts of unreported income on their tax returns.
Does Coinbase issue 1099-K forms?
Coinbase stopped issuing Form 1099-Ks after 2020 because of the confusion they caused.
Because the forms showed total transaction volume, 1099-Ks resulted in thousands of Coinbase customers receiving CP2000 letters from the IRS claiming they significantly underreported their income for the year.
Does Coinbase issue 1099 forms today?
Today, Coinbase issues Form 1099-MISC. This form is used to report ‘miscellaneous income’ such as referral and staking rewards.
Of course, all of your taxable events need to be reported on your year-end tax return. Even if you do not receive a Form 1099 for your crypto, you are required to report gains, losses, and income on your taxes.
What is Coinbase’s tax reporting threshold?
Coinbase typically sends 1099-MISC forms to customers if they meet the following conditions.
- You are a Coinbase customer
- You are a U.S. person
- You earned $600 or more from Coinbase Earn, UDSC Rewards, and/or staking rewards
Does Coinbase issue 1099-Bs?
In the near future, Coinbase will likely be required to issue 1099-B forms to all customers due to the passage of the 2021 infrastructure bill. This form is designed to provide information about disposals of properties such as cryptocurrencies.
For more information on Coinbase tax reporting and the differences between different 1099 forms, check out our complete guide about how Coinbase reports to the IRS.
File your Coinbase taxes today
Don’t wait until the tax deadline to file your Coinbase taxes. Get started with CoinLedger, the crypto tax software trusted by more than 500,000 investors.
CoinLedger can automatically integrate with Coinbase, Coinbase Pro, and other major exchanges, allowing you to generate a complete tax report in minutes.
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