It is no secret that the IRS is cracking down on cryptocurrency holders who have not reported their gains from digital asset trading. In fact, the agency has already sent out thousands of warning letters to taxpayers who may have failed to report their crypto-related income.
And, Coinbase, one of the most popular cryptocurrency exchanges, has been cooperating with the IRS since 2017.
This means that if you are a US taxpayer and you have traded on Coinbase, there is a good chance that your transaction history has been shared with the IRS. So, if you have not yet reported your crypto gains to the IRS, now would be a good time to do so.
Of course, you are not required to report every single Coinbase transaction to the IRS. Only those transactions that resulted in a capital gain or loss need to be reported.
So, if you only traded on Coinbase for speculative purposes and did not realize any gains or losses, then you are not required to report those trades.
However, if you did realize gains or losses from trading on Coinbase, then you will need to report those trades on your tax return. Fortunately, Coinbase makes it easy to generate a tax report for all of your transactions.
Simply log into your account and go to the “Tax Reports” section. From there, you can select the year that you would like to generate a report for and Coinbase will provide you with a complete list of all of your transactions along with the relevant tax information.
So, if you have traded on Coinbase in the past and have not yet reported those trades to the IRS, now is the time to do so. Failure to properly report your crypto-related income could result in hefty fines and penalties from the IRS.