On Thursday (January 24th), Coinbase provided information about two important tools that can help its customers with their cryptocurrency-related tax reporting obligations.
Before we talk about these tools, it is important to note that even if you lost money on your crypto trading during the previous tax year (2018 calendar year in the case of the U.S., and 06 April 2017 to 5 April 2018 in the case of the UK), you may need/want to report such losses. Also, even if during the previous tax year you only had crypto-to-crypto trades, received free coins/tokens via air drops, or paid for goods/services using crypto, you may need to report these transactions and possibly have some tax liability.
For U.S. Residents
Coinbase says that Californian financial software company Intuit's U.S. tax filing product TurboTax product range has been updated such that there is now "a new crypto tax section" that allows "you to upload your transactions and account for gains and losses," with Coinbase customers able to "upload up to 100 Coinbase transactions at once."
Yesterday, Intuit published a blog post that explained the steps TurboTax is taking "to streamline the crypto community’s experience this tax season."
Intuit says that previously "you were required to manually enter each taxable transaction, which could take hours," but now "you can upload up to 100 Coinbase transactions from Coinbase at once, through compatible .csv files to TurboTax Premier," and "the uploaded .csv files will include the cost basis of your Coinbase transactions (if available) so TurboTax Premier can easily help you file your cryptocurrency transactions." Intuit notes that "the .csv you download from Coinbase won’t have information about crypto transactions outside of Coinbase (including on Coinbase Pro), so it’s important to review and verify the information for accuracy depending on how you transacted on Coinbase."
Intuit also wants U.S. taxpayers to know that they will need to "report cryptocurrency as income" if any of the following events took events during the previous tax year:
- "Converted cryptocurrency to a regular currency like US dollars"
- "Sold cryptocurrency"
- "Spent cryptocurrency to pay for goods or services"
- "Received free coins through a fork or an airdrop"
However, Intuit says that the following types of transactions are not taxable:
- "Bought cryptocurrency but have not sold it"
- "Gifted cryptocurrency to a friend or family member and the gift was under $15,000 per person receiving the gift"
- "Purchased cryptocurrency with a Self-Directed IRA or Solo 401(k)"
Coinbase integration is available "in several products, including TurboTax Premier, TurboTax Self-Employed, TurboTax Live Premier and TurboTax Live Self-Employed."
For Both U.S. and UK Residents
Coinbase says that to help its "expert customers" (who presumably do not much advice or hand-holding during the tax return filing process), it has partnered with CoinTracker (crypto portolio and tax management software) "to make it easy to summarize all of your transaction activity for 2018, no matter what exchanges or wallets you used (including Coinbase Pro)," and that CoinTracker "also partners with TurboTax and can be used to upload a comprehensive view of your crypto activity."
CoinTracker, which is backed by Y Combinator, Initialized Capital, Kindred Ventures, and Blockstack, has "users spanned across the world."
CoinTracker's main features are
- "Cost basis methods: FIFO, LIFO, HIFO, ACB, Share pool"
- "Auto sync with exchanges and wallets" (with support for 20+ major crypto exchanges including Binance, Bitfinex, BitMAX, Bitstamp, Coinbase Consumer/Pro, Gemini, Huobi, Kraken, and Poloniex)
- "Transaction history CSV"
- "Capital gains report"
- "Export to TurboTax"
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