The link between cryptocurrencies and the US tax system may be coming to an end, at least for certain people. If they meet specific conditions in the previous year, users of the prominent digital currency exchange Coinbase will get 1099-K tax forms.
According to Bitcoin.com, the San Francisco-based exchange sent 1099 tax forms on January 31 to certain American clients who received cash in excess of the necessary reporting level.
200 Receipt Transactions or $20,000
Which Coinbase users will get tax forms? Those that got more than $20,000 in cash in the calendar year 2017 or had more than 200 receipt transactions on the exchange.
While majority of the users designated to get the forms are individuals, forms will also be delivered to “commercial usage” accounts and GDAX accounts that match the aforementioned taxation requirements.
In the context of “business usage,” this phrase refers to accounts that received payments in return for products or services. It excludes payments made for mining profits or payments made as a consequence of a transfer between wallets owned by the same user.
Some Coinbase Users Are Not Happy
Coinbase said that it “used the best data available…to assess whether your account behavior qualifies as Business Use, including but not limited to considerations such as completion of a merchant profile or activating merchant tools” under the “business use” clause.
Unsurprisingly, many Coinbase clients who have received tax papers are dissatisfied with the situation. Cryptocurrency supporters often argue that decentralized and uncontrolled assets should not be taxed in the same manner that traditional investment vehicles are.
To make things worse, some customers believe Coinbase blindsided them with the tax form and are now dissatisfied since the values that create the threshold criteria were not communicated to them.
Individuals who suspect they have received tax paperwork in mistake from Coinbase can contact the exchange via their support channels and speak with a tax specialist. After all, this is not the first time Coinbase has had problems with the IRS.
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Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is very dangerous and speculative, and this article is not a suggestion byInvestopedia or the author to do so. Because every person’s circumstance is different, a knowledgeable specialist should always be contacted before making any financial choices. Investopedia makes no guarantees or warranties about the accuracy or timeliness of the information provided on this site. The author owns cryptocurrencies as of the day this post was published.
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