Exchanges like Coinbase provide transaction history to every customer, but only customers meeting certain mandated thresholds will also receive an IRS Form 1099-K. But what can we do with it and how to use it in filing taxes?
You would have received a 1099-K from Coinbase Pro. All it really says is how much money you had IN from everywhere. It doesn’t display any info on how much you made/lost with each trade.
So, what can do you do with this 1099-K?
Coinbase’s 1099K form is a kind of consolidated information describing the volume of your trades (Exchanges like Coinbase provide transaction history to every customer, but only customers meeting certain mandated thresholds will also receive an IRS Form 1099-K.).
Even though you could have just traded with $10K — it will have all the buys and sells and the final number looks daunting. This won’t be much use for filing your taxes. As mentioned above, this is form sent to traders on Coinbase who have exceeded a threshold.
This is a similar situation that happened to one of my friends last January.
Following are two options:
Have used ONLY Coinbase
If you have just traded ONLY on Coinbase, you can use their tax center and download tax form, which can be used to upload on TurboTax Online or provide to your tax preparer/CPA.
Traded on other exchanges too (80% of users)
If you have traded on Coinbase and other exchanges — then the tax form provided by Coinbase is of no use (see below for exclusions)
In this case, you would have to use third-party cryptocurrency tax software like BearTax where you can import your transactions from Coinbase and almost every other exchange, review them and calculate your capital gains or losses.