With just three months until the deadline for United States citizens to declare their crypto gains and losses to the Internal Revenue Service, Coinbase is partnering with portfolio tracking and tax calculating platform CoinTracker to make the process simpler.
According to CoinTracker, it's an easy way for Coinbase users to report their crypto transactions and sales. Targeted at U.S. users, CoinTracker will calculate and fill out the specific forms — for example, Form 8949 and Schedule D — to declare capital gains, losses and assets on income tax returns. It can be used by individuals and accountants or as part of a tax filing software program like TurboTax.
CoinTracker co-founder Chandan Lodha said the partnership would allow for a “one-click integration” from the Coinbase taxes page, allowing users to calculate crypto gains and losses on the platform. Coinbase’s investment arm, Coinbase Ventures, has made an undisclosed investment in the platform.
Cointelegraph reported in November that the IRS was taking a stronger position against Coinbase users who fail tax reporting requirements for crypto. Though some crypto users may believe it is difficult for the government to track crypto transactions, sales, profits and otherwise, lying or omitting such information in the United States is considered tax fraud and could result in an audit, fines and imprisonment.
Last month, Coinbase announced that it had switched from issuing 1099-K forms to 1099-MISC forms as part of its legal obligation as a registered business in the U.S. to declare any crypto income for taxpayers. This move would essentially allow the crypto exchange to provide taxpayer information to the IRS for any crypto user who received more than $600 in payments in 2020.
The IRS has become more diligent in scrutinizing crypto as the industry grows. A memorandum from the federal agency released in August 2020 reveals that the U.S. government considers all crypto payments as taxable income. In December 2020, the IRS placed a question asking U.S. citizens to disclose if they had interacted with digital assets at the top of their 2020 income tax returns. One crypto tax specialist noted at the time that anyone who answered dishonestly could potentially be charged with perjury for falsifying information on a government document.
Lodha told Cointelegraph in April 2020 that CoinTracker "helps increase faith and legitimacy of the cryptocurrency industry as a whole“ because it helps regulators to see that "the vast majority of cryptocurrency use is by everyday people for completely legal transactions and people are crypto tax-compliant.”