1099 tax forms come in two flavors: the 1099-B and the 1099-MISC. They are issued by exchanges to their users and directly to the IRS, and these forms detail a users asset disposal and income records. Assuming we have your full transaction data in TaxBit, both forms should serve as a useful cross-reference, but, if you have an 8949, the 1099 forms won't be needed to complete your crypto tax filings.
In this article:
What is an IRS 1099-MISC form?
For U.S. taxpayers, the IRS requires companies that make certain types of payments to provide the recipient of such payments and the IRS with a 1099-MISC. This form provides information for a wide range of income payments such as crypto interest, referral bonuses, and other income.
If you’ve earned $600 or more this year in crypto interest or bonuses, the 1099-MISC will be made available by the platform that issued the payments by January 31 of the corresponding tax year. You are responsible for reporting the income on the 1099-MISC when filing your tax return.
As long as you have ALL your transaction data in your account, including ALL your income transactions, your yearly income will be summarized within our income report. When you go to file your taxes, you'll simply add the amount of crypto income in your income report to your taxable income. You can find more information about the income report TaxBit issues for each tax year HERE.
What is an IRS 1099-B form?
The US tax form 1099-B provides transactional information detailing capital gains and losses from disposing of capital assets. At this time, cryptocurrency is classified as property. The information on Form 1099-B helps you fill out Schedule D and Form 8949.
When you sell something for more than it cost you to acquire it, the profit is a capital gain and may be taxable. On the other hand, if you sell something for less than you paid for it, then you may have a capital loss, which you might be able to use to reduce your taxable capital gains.
In short, you pay taxes on capital gains with your income tax return, using Schedule D. The information on Form 1099-B helps you fill out your IRS 8949, which should be reported on Schedule D of your tax return.
So what do I need an 8949 for?
When you sell/trade cryptocurrency for a profit or loss, the IRS requires the details of the transaction to be reported on Form 8949, “Sales and Other Dispositions of Capital Assets”. For more information on the 8949 form you can also have a read through our article on the topic, found HERE.
Form 1099-B summarizes the information that should be included on your IRS 8949. Your Form 1099-B will detail each asset you sell throughout the year. This form reports your cost basis, when available, for the assets you bought and sold on the platform. Your 1099-B will be issued by individual platforms you made disposals on in a given year, and is provided to you as well as to the IRS.
Since TaxBit calculates the cost basis and corresponding gains or losses on every transaction, using our service correctly will make your 1099-B's useful as cross reference only. While good for checking our work, you shouldn't need to use any of the data it contains directly. TaxBit simplifies tax reporting by generating Form 8949 for you using your FULL transaction data, which should reconcile to each of the 1099-B forms you receive.
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