As a result, Coinbase and other large exchanges began by issuing 1099-K forms. The IRS eventually advised crypto exchanges to issue 1099-K forms to users trading over a certain volume in 2018. This is why there are many 1099 forms available - but none of them are specifically designed for crypto tax reporting. But there are exceptions to this, as many financial service providers issue a 1099 form to any customers who earn more than $10 in interest throughout a financial year. The basic guidance for 1099 forms means any business that pays more than $600 to a payee in a single year must issue a 1099 form. What does the IRS say about crypto 1099 forms? But the problem with this is that the IRS has lacked clear guidance around how they view crypto exchanges and the subsequent tax reporting requirements. Other large exchanges - expecting impending audits - have done their best to comply with the IRS to avoid legal action. Since then, the IRS has issued similar summons against both Kraken and Poloniex. The IRS took Coinbase to court using a John Doe summons back in 2016 and won - meaning the exchange had to share customer data with them. Coinbase is perhaps the most notable example of this. Yes - but it all depends on the exchange you use.
So in the name of tax compliance, some exchanges issue a 1099 form to both their customers and an identical copy to the IRS.ĭo you get a 1099 form for cryptocurrency? What's a crypto 1099 form and will I get one?Ĭrypto exchanges began sending out IRS 1099 forms a few years ago in response to increasing pressure from the IRS to share customer data. Let's look at the 1099 forms used to report crypto. There are 20 different types of 1099 forms available for a variety of businesses to file to report different kinds of income paid, but only some 1099 forms are issued for crypto investors. It is merely a record of income from that client, business or entity. For example, freelancers and contractors may receive one from a client. You can receive an IRS 1099 form for lots of different reasons. What is an IRS 1099 form?Īn IRS 1099 form is a record of income for an individual taxpayer. Here's everything you need to know about crypto 1099 forms including the differences between 1099-K, 1099-B, and 1099-MISC forms and what they mean for your crypto taxes. Not only are the US crypto tax rules complicated, but the forms you need to report your crypto to the IRS only seem to increase each year! If your exchange has sent you a 1099-K, 1099-B, or even a 1099-MISC form - you’re probably wondering what you need to do with it. Most US taxpayers know how much the IRS loves tricky tax returns - and this is especially true when it comes to crypto taxes.
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