Click hera to watch the video .
back in 2020, Coinbase announced that they would no farseeing issue Form 1099-K to their users, and rather would issue Form 1099-MISC to certain users for tax class 2020 and beyond. This was great newsworthiness for users of the largest cryptocurrency central in the US, since the 1099-K created some major tax headaches .
however, the 1099-MISC from Coinbase still may not provide everything you need to properly report crypto taxes .
Read on to learn more about why this form is issued, who receives it, and what to do with this tax form.

Our free, on-demand cryptocurrency tax webinar explains how to complete your tax return bit-by-bit. You ’ ll besides get a complimentary download with reporting instructions !
What does the Coinbase 1099-MISC report?
The 1099-MISC from Coinbase includes any rewards or fees from Coinbase Earn, USDC Rewards, and/or impale that a Coinbase user earned in the previous tax class. It does not include any income made from selling and trade crypto, nor will it cover other taxable transactions such as purchases of goods or services made with crypto .

Who receives a 1099-MISC from Coinbase?
According to the company web site, you will receive this tax form from Coinbase if :

  • You used Coinbase, Coinbase Pro, or Coinbase Prime in 2020 or beyond
  • AND you earned $600 or more in rewards or fees from Coinbase Earn, USDC Rewards, or staking during the year

While users who don ’ t qualify to receive the Coinbase 1099-MISC mannequin will not receive any early tax forms from the exchange, it ’ randomness required to report cryptocurrency taxes regardless of whether you receive any such forms .
What to do with Coinbase tax documents

While most people think crypto tax report is entirely relate to capital gains and losses, this international relations and security network ’ t the encase. Coinbase tax documents report cryptocurrency that is taxed as even income. Where this income is reported depends on your employment condition .
Self-Employed (Business Owners, Freelancers, and Independent Contractors): If you are freelance and your crypto activities are separate of a trade or business, the information contained on the Coinbase 1099-MISC will be reported on Schedule C .
Not Self-Employed: For individuals who are not freelance and who file Form 1040, the Coinbase 1099-MISC data will be reported as “ other income ” on Schedule 1, Line 8 of their annual tax render .
If you had any extra cryptocurrency activity—for example, if you traded crypto on Coinbase, bought anything with crypto, or traded on any other exchanges—then the Coinbase 1099-MISC will unfortunately not include everything you need for a wide crypto tax report. Watch our Crypto Tax 101 webinar for bit-by-bit instructions on how to report cryptocurrency taxes .
Does Coinbase report to the IRS?
Yes. When Coinbase sends out Form 1099-MISC, it sends out two copies. One goes to the eligible user with more than $ 600 from crypto rewards or impale, and the other goes immediately to the IRS. consequently, if you have received a Form 1099-MISC from Coinbase, then the IRS has received one a well .
About the Form 1099-K from Coinbase
While Coinbase is no longer issuing Form 1099-K to users, you may hush see the effects of this tax class if you used Coinbase between 2014 and 2019.

Whereas a 1099-MISC reports ordinary income from Coinbase, Form 1099-K only reports sum sales volume—not your cost basis ( the amount you initially paid for your crypto ). therefore, the 1099-K tends to overreport the entire sum of capital gains you have because it does not take into account how much you paid for the crypto that you former sold .
The IRS has sent crypto notices to thousands of crypto traders who they suspected of underreporting income. Coinbase users have received IRS Letters 6174, 6174-A, or 6173 ; IRS Notice CP2000 ; and IRS Notice CP2501. These notices are much based on incomplete data from Form 1099-K .
so even though the 1099-MISC is fairly incomplete, it ’ s decidedly an improvement over the tax forms that Coinbase used to send !

source : https://coinselected
Category : coin 4u

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