How is cryptocurrency treated for tax purposes?
The IRS classifies cryptocurrency as “property” for tax purposes. This means that each cryptocurrency trade or sale is a taxable event. Similar to stocks and equities, if a taxpayer traded or sold cryptocurrency, then the person should report their taxable transactions on IRS Form 8949.
The IRS recently released its 2019 IRS Form Schedule 1, which requires every taxpayer to attest to the following: “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency.” If yes, then the IRS may verify that the taxpayer reported all taxable cryptocurrency transactions on IRS Form 8949. Gemini is unable to provide tax advice so we recommend that users consult a tax professional when considering their individual tax reporting requirements.
2019 IRS Form Schedule 1 example
How do I complete my IRS Form 8949?
Gemini is working with TaxBit to help our users generate and file the IRS Form 8949. Gemini customers can use TaxBit to securely sync their Gemini account transaction activity to an external, user-friendly platform where they will be able to access their fully populated IRS form 8949 at the click of a button.
TaxBit was founded by CPA’s, tax attorneys, and software developers in order to make crypto tax preparation easy. TaxBit’s intuitive software allows users to track their cryptocurrency activity across multiple exchanges, generate the required tax forms, and document all tax calculations through its CPA-designed audit trail. TaxBit offers Select plans, which include IRS audit support in the event a user is audited by the IRS.
Gemini users can receive a 10% discount for signing up for a TaxBit plan here*: www.taxbit.com/invite/Gemini
Federal Reporting (State-specific reporting requirements at bottom of page)
Will I receive any tax documents from Gemini?
Gemini takes the position that it is a Third Party Settlement Organization (“TPSO”) under Section 6050W of the Internal Revenue Code and must file IRS Forms 1099-K accordingly for certain transactions settled on its platform. We will continue to evaluate this assessment and update our client base if Gemini’s interpretations or IRS guidance changes.**
Gemini will deliver Forms 1099-K to Gemini users who meet BOTH of the following conditions:
- The Digital Asset-for-USD sales on the exchange exceed 200 transactions during the calendar year, AND
- Total sales proceeds from all Digital Asset-for-USD sales exceed $20,000 during the calendar year.
If your account has met both of the thresholds above, you will receive a Form 1099-K from Gemini by mail at the end of January. An identical copy of the account’s Form 1099-K will be filed with the IRS.
If you were expecting to receive a Form 1099-K and did not, it’s likely that you have only met ONE of the conditions above, not both.
Note: If you live in Arkansas, the District of Columbia, Massachusetts, Mississippi, Missouri, New Jersey or Vermont, you may be subject to different reporting thresholds; please see the “State Reporting” section at the bottom of this page for more information.
What information is reported on the 1099-K form?
Form 1099-K reports third party network payments received for the calendar year. Gemini is required to report gross proceeds from all Digital Asset-for-USD sales executed on the Gemini exchange when applicable reporting thresholds are met.
What information is NOT included within Form 1099-K?
Form 1099-K is informational and does not show gains or losses or cost basis.
Form 1099-K is NOT the same as Form 1099-B (which shows either gross proceeds or gains/losses from broker transactions). Gemini takes the position that it is not required to issue Forms 1099-B because bitcoin, bitcoin cash, ether, zcash, and litecoin sales are regarded as sales of personal property under current IRS guidance.
Where can I find my transaction history?
You can find the amounts reported on the 1099-K in your account’s transaction history Excel file. You can access the file by following the steps below:
- Navigate to https://exchange.gemini.com/history
- Click the drop-down arrow next to your account.
- Click the “Trade History” or "Transfer History" tab.
- Click "Download History (xlsx)" and select your desired date range. Click "Download .xlsx" and the transaction history will download onto your device.
- To calculate gross proceeds from Digital Asset-to-USD sales, you will need to filter by "Sell" transactions in Column C and aggregate the corresponding USD amounts in Column H.
I misplaced my Gemini-issued Form 1099-K; can Gemini send another copy?
Yes! Gemini is happy to resend your Form 1099-K. Please submit a request through our contact form here.
Where can I find more information about Form 1099-K?
You may read more on this IRS Instructions for Form 1099-K website. We have found that the “Specific Instructions” on Page 1 provide valuable context with respect to Gemini’s Form 1099-K reporting obligations.
We also kindly suggest that you consult with your tax advisor if you have questions about your individual tax obligations derived from your activity conducted on the Gemini exchange.
State Reporting
Do Forms 1099-K reporting requirements apply to residents of certain states?
Yes, the following state tax authorities have established lower thresholds than the IRS federal requirements for Form 1099-K reporting. Any Gemini customers who reside in those states will receive a Form 1099-K when the total proceeds from all Digital Asset-for-USD sales during the calendar year exceed the thresholds listed below (regardless of the number of Digital Asset-for-USD sales executed).
If you are a resident of a state listed below and exceed the lower threshold, you will receive a Form 1099-K.
|
Jurisdiction |
Transaction Reporting Thresholds |
|
Arkansas |
Total payments equal or exceed $2,500 |
|
District of Columbia |
Total payments equal or exceed $600 |
|
Massachusetts |
Total payments equal or exceed $600 |
|
Mississippi |
Total payments equal or exceed $600 |
|
Missouri |
Total payments equal or exceed $1,200 |
|
New Jersey |
Total payments equal or exceed $1,000 |
|
Vermont |
Total payments equal or exceed $600 |
Helpful Articles Regarding Cryptocurrency Taxes
What to do if you receive an IRS CP2000 letter
Proper cryptocurrency cost basis assignment methods
The IRS released new cryptocurrency tax guidance
*Important Note: Gemini has established a referral arrangement with TaxBit, pursuant to which Gemini may receive certain fees on account of a Gemini user’s purchase of TaxBit services. TaxBit is not a Gemini product. If you use TaxBit, you will be subject to TaxBit’s applicable terms and conditions, including a separate privacy policy, which may differ from Gemini’s privacy policy. You should read and understand TaxBit’s applicable terms and conditions before using its service.
**Legal disclaimer: Gemini takes the position that it is a Third Party Settlement Organization under Section 6050W of the Internal Revenue Code for certain transactions, and accordingly must file IRS Forms 1099-K for transactions settled on its platform, including transactions involving the sale of digital currencies for cash between users. Therefore, we will be filing a Form 1099-K with the IRS and in some cases, certain State authorities, reporting transactions by Gemini customers each year where we are required to do so under applicable regulations under Section 6050W. We will also send you a copy of the IRS Form 1099-K via mail. Gemini does not offer tax advice; consult an outside tax professional for guidance on your tax filing obligations.