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If you’ve purchased, sold or traded Bitcoin on Cash App, you will need to know where to find the necessary forms to help report for taxes.
A draft of an IRS tax form was released in October 2019 that asks whether or not you’ve dabbled in the virtual currency world.
“At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?
Cash App form 1099-B
Cash App will be one of the easier exchanges to file taxes in since there is only one crypto and no advanced trading interface.
The company is required by law to file a copy of your 1099-B form to the IRS every year. Buying Bitcoin is not a taxable event, but net profits from selling it is.
By going to your account page on Cash App’s website, you should be able to receive your 1099-B by February 15th.
According to Cash App, “The proceeds box amount on the Form 1099-B shows the net cash proceeds from your Bitcoin sales.”
If you sent Bitcoin to an exchange
If you sent your Bitcoin to Coinbase Pro for trading purposes, you shouldn’t need to report anything as long as you had under 200 transactions.
In most states, those 200 transactions have to have earned over $20,000 in order to require payment. For the few states that have lower thresholds, see the previous link.
Bitcoin sent to an exchange like BitMex or Deribit that doesn’t have KYC requirements will likely not be recognized like Coinbase Pro but keep records just incase.
Transferring between crypto wallets is non-taxable, but again, net profits are. This means that the amount of Bitcoin received on a regulated exchange minus the amount that you’ve purchased with fiat can be subject to taxation.
The barrier to entry in crypto trading is much lower than in traditional markets, but it doesn’t mean that the IRS doesn’t take it as seriously. Before you make big money, it’s important to know the big facts on how you will be taxed.