The information below is provided for general informational purposes and should not be considered tax advice. Please consult a tax advisor to determine your personal tax obligations that result from your activities on Gemini, including dispositions, earnings, and rewards.
2021 Tax Information Reporting issued by the Gemini Exchange
Forms 1099-MISC
Gemini issues Forms 1099-MISC for non-exempt U.S. exchange account holders who have earned more than $600 (USD equivalent) in income during the calendar year. Forms will be issued to recipients by January 31 of the year following receipt of your earnings. You can download your Form 1099-MISC (or confirm you did not receive one) on or after January 31st in the Statements and History section on the Account page on the Gemini web or mobile app.
Income activities on the exchange:
Gemini Earn
Earnings from lending crypto assets through the Gemini Earn program will be calculated by identifying the daily asset allocation multiplied by the current price of the asset at the time of allocation. Forms 1099-MISC will be issued according to this calculation (reflecting the USD equivalent) regardless of whether assets have been redeemed from Earn.
To determine your Earn income for the year, you can go to Account> Balances> press the Download button > select Earn History> set the appropriate date range> download the report.
Filter the report by Type: Interest Credit. There will be a column for each crypto asset lent that reflects the Interest in U.S. dollars titled “Amount USD”. The sum of the daily “Amount USD” credits for the calendar year, for each asset lent, will be the amount reportable on the Form 1099-MISC, if it exceeds the $600 threshold. Please make sure to include the “Amount USD” for each asset lent to identify your total Earn income amount. Please note that if the Earn income amount does not meet the $600 threshold, but your Gemini account reflects bonuses or rewards that when added to the Earn income amount do meet the threshold, a Form 1099-MISC will be issued.
Refer a Friend, Sign Up, or Trading Bonuses
Bonuses/promotions will also count toward the $600 threshold of income earned on the Gemini platform.
To determine your bonus income for the year, you can go to Account> Balances> press the Download button > select History> set the appropriate date range (1/1/2021 through 12/31/2021)> download the report. Filter the report to find your bonuses. Your bonuses will show up under Type: Credit, Symbol: either BTC or ETH (depending on the promotion you participated in), Specification: Administrative Credit or Referral Credit. Refer to the “BTC Amount BTC” or “ETH Amount ETH” columns for credits reportable as income.
BAT Rewards
Basic Attention Token (BAT) promotional giveaways will count toward the $600 threshold of income earned on the Gemini platform.
To determine your BAT giveaway income for the year, you can go to Account> Balances> press the Download button > select History> set the appropriate date range (1/1/2021 through 12/31/2021)> download the report. Filter the report to find your rewards. Your BAT rewards will show up under Type: Credit, Symbol: BAT, Specification: Administrative Credit.
Forms 1099-K
In prior years, Gemini reported proceeds from dispositions of crypto assets on Forms 1099-K. Upon further evaluation of the requirements of Internal Revenue Code Section 6050W, Gemini will not be issuing Forms 1099-K for 2021. Based on recently passed legislation, Gemini plans to issue Forms 1099 for crypto asset dispositions as required once the pending tax regulations are finalized (currently expected to begin for the 2023 tax year).
Forms 1099-B
Recent federal legislation indicates that Forms 1099-B (or similar forms designed specifically for digital assets) will be required to be issued for dispositions of crypto assets starting on 1/1/2023. For 2021, Gemini will not issue Forms 1099-B for dispositions of crypto assets.
Transaction Data
To prepare your U.S. tax filing obligations you may be required to reference your transaction data. You can access your transaction history Excel file by following the steps below:
1) Navigate to https://exchange.gemini.com/history
2) Click the “Transaction History” tab
3) Click the download button and select your desired date range. Click "Download.xlsx" and the transaction history will download onto your device
Determining crypto tax liabilities for 2021:
The IRS has issued guidance on the taxation of crypto activities including earnings, gains, losses, and donations. How these transactions are taxed may vary depending on each individual’s personal tax situation, which is why it is critical for each filer to consider their own situation independently.
Please refer to the FAQ on Virtual Currency Transactions issued by the IRS for specific information.
How will my crypto transactions be taxed?
Earned crypto: All crypto assets earned by U.S. persons are taxable and required to be reported on a U.S. tax return regardless of whether a Form 1099-MISC was issued. Crypto assets can be earned on the Gemini exchange by lending assets through Earn, or through bonuses or promotions.
Dispositions: Gains and losses from cryptocurrency dispositions may be taxed differently for different types of investors. Refer to IRS Publication 544 for further guidance. A disposition occurs when crypto assets are sold for fiat currency, exchanged for other crypto assets, or used to purchase goods or services. Gains that are recognized from assets held for longer than one year (long term) are generally taxed at lower rates than gains recognized from assets held for less than a year (short term).
Credit Card Rewards: In general, the IRS deems credit card rewards earned through spending activities as rebates or discounts rather than income, making them non-taxable at the time of grant. However, note that selling crypto (including crypto that was earned as credit card rewards) can create a tax liability in certain scenarios. The cost basis of the crypto assets earned as credit card rewards is captured as the value of the asset at the time of receipt. Disposition of the asset is taxed if there is a gain recognized (see: “Dispositions” above).
Wash Sales: A “wash sale” occurs when an asset is sold for a loss but repurchased within 30 days of the disposal period. In this scenario, the owner has the economic benefit of owning the same asset but obtains the tax benefit of the loss. These losses are generally not allowed to be recognized when the asset that is sold and repurchased is a traditional security (stock in a publicly traded corporation). However, in 2021 the wash sale rules do not apply to crypto assets. As such, a person who owned a crypto asset and sold it at lower than purchase price can still claim the loss on a 2021 tax return even if the same asset was repurchased within 30 days.
Transfers: Transfers of crypto assets between exchange accounts (owned by the same person) or storage methods is not a taxable event. It is expected to be a reportable event in the future for purposes of cost basis tracking but will not be taxed as a disposition.
Purchases: The purchase of crypto assets is not a taxable event to the purchaser.
Donations: Donations of crypto assets made to a registered charitable or nonprofit organization is generally eligible for a deduction. The amount eligible for deduction is equal to the fair market value of the crypto asset at the time of the donation if you have held the crypto asset for more than one year. If you have held the crypto asset for one year or less at the time of the donation, your deduction is the lesser of your basis in the virtual currency or the virtual currency’s fair market value at the time of the contribution.
How to Report Crypto Transactions on a U.S. Tax Return
Form 1040
The Form 1040 (U.S. individual income tax return) asks whether at any time during the year the taxpayer received, sold, sent, exchanged or otherwise acquired any financial interest in any virtual currency. This question was specifically designed to identify taxpayers who have engaged in crypto transactions in the absence of a clear information reporting regime that applies to crypto exchanges. Please note that if your only activity was the purchase of crypto assets with fiat currency and you had no earnings or dispositions you are not required to answer yes to this question.
In general, U.S. individual taxpayers will file the Form 1040, reporting the income from crypto transactions on Schedule 1, and capital gains and losses from crypto transactions on an attached Schedule D. Transactions are itemized on Form 8949, where a taxpayer will list each disposition along with a corresponding tax basis to determine a gain or loss.
Due to the increasingly complex rules for taxation of crypto transactions and lack of clarity for exchange tax information reporting requirements in 2021, Gemini has determined that the best way to assist our exchange account holders in determining their tax obligations is to offer a FREE TaxBit account. TaxBit will allow you to link your Gemini account (and any other TaxBit Network exchange account) to a central location, determine a tax lot selection method, and produce a Form 8949 that will determine your total gain or loss from crypto transactions to report on a Form 1040.
Use this link to create your free TaxBit account!