Are you a Coinbase Pro user looking to file your crypto taxes?
Coinbase Pro is one of the most popular cryptocurrency exchanges in the world. However, even serious traders often feel confused about how to report their transactions on the platform.
In this guide, we’ll share the basics of how cryptocurrency is taxed and break down a simple 3-step process to help you report your Coinbase Pro taxes to the IRS.
What is Coinbase Pro?
In 2015, Coinbase decided to start a new platform for dedicated crypto traders. The platform was originally called GDAX, but changed its name to Coinbase Pro in 2018.
Today, Coinbase Pro gives users several options to buy and sell cryptocurrencies such as limit orders, stop orders, and market orders. The exchange offers some of the lowest fees available for US and European investors.
What taxes do you need to pay on Coinbase Pro?
To understand how much you’ll be paying in taxes on your Coinbase Pro transactions, let’s review the basics of cryptocurrency taxes.
The IRS considers cryptocurrency a form of property that is subject to both income and capital gains tax.
Income tax events: If you earn cryptocurrency as a form of income, this is considered personal income and will be taxed accordingly.
Capital gains events: You incur capital gains or losses every time you dispose of your cryptocurrency. Selling your cryptocurrency or trading it for another cryptocurrency on Coinbase Pro would fall under this category.
For more information, check out our complete guide to cryptocurrency taxes.
Does Coinbase Pro report to the IRS?
Coinbase Pro sends out 1099-MISC to users and the IRS if the following conditions are met:
- You are a Coinbase customer AND
- You are a US person for tax purposes AND
- You have earned $600 or more in rewards or fees from Coinbase Earn, USDC Rewards, and/or Staking in 2020.
It’s important to remember that this form is not enough to report your taxes. The 1099-MISC is meant to help users report miscellaneous income from rewards, but it does not show every taxable event that needs to be reported to the IRS.
In the future, exchanges like Coinbase Pro will need to provide more comprehensive user transaction reporting to the IRS. The 2021 American infrastructure bill requires parties facilitating cryptocurrency transactions to submit 1099 forms that report your crypto transactions.
Does Coinbase Pro keep track of your taxes?
There’s a reason why Coinbase Pro and other cryptocurrency exchanges struggle to provide you with complete tax records.
Many cryptocurrency investors use multiple exchanges, wallets, and platforms and transfer cryptocurrencies between them. Exchanges like Coinbase Pro only have access to transactions that happen on their own platform. If you buy or sell your cryptocurrency on a different platform, Coinbase Pro won’t be able to track your cost basis and calculate your complete crypto tax liability.
To get a complete record of your entire cryptocurrency transaction history, we recommend using crypto tax software. CoinLedger can aggregate your transactions across different wallets and exchanges to help you easily report your cryptocurrency taxes.
How to do your Coinbase Pro taxes
Here’s how you can include all of your Coinbase Pro transactions on your tax report within minutes.
1. Within CoinLedger, click the “Add Account” button on the top left.
2. Find Coinbase Pro in the list of supported exchanges and select the import method you prefer.
3. You can automatically import your Coinbase Pro transactions using an API connection or import them manually through a CSV file.
And that’s it! Once you’re finished importing your transactions from Coinbase Pro and any other cryptocurrency exchange you are using, you can generate a complete tax report with the click of a button.
Make managing your Coinbase Pro taxes stress-free
Want to get started managing your taxes on Coinbase Pro and other exchanges? Try CoinLedger, the platform used by more than 300,000 crypto investors around the world.
Get started with a free preview tax report today.
