What Do I Need To Know About Cryptocurrency Tax Reporting?

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 released its 2020 IRS Form 1040, which requires every taxpayer to attest to the following: “At any time during 2020, 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.
 

2020 IRS Form 1040 example

Gemini is working with TaxBit to help our users generate and file 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*:https://taxbit.com/invite/gemini/

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:

1. The Digital Asset-for-USD sales on the exchange exceed 200 transactions during the calendar year, AND
2. 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 electronically 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, Illinois, Maryland, Massachusetts, Mississippi, Missouri, New Jersey, Virginia 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:

1. Navigate to https://exchange.gemini.com/history
2. Click the drop-down arrow next to your account.
3. Click the “Trade History” or "Transfer History" tab.
4. Click "Download History (xlsx)" and select your desired date range. Click "Download .xlsx" and the transaction history will download onto your device.
5. 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.

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.

1. Navigate to https://exchange.gemini.com/history
2. Click the drop-down arrow next to your account
3. Click the “Trade History” tab
4. Click "Tax Document (pdf)", click "Download .pdf", and your 2020 Form 1099-K will download onto your device

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