Cryptocurrency exchange Coinbase has partnered with tax software provider CoinTracker to make it easier for its users to file tax reports.
CoinTracker co-founder Chandan Lodha said that the service will allow American users of Coinbase to calculate profits and losses from cryptocurrency trading. With CoinTracker, traders will also be able to fill out Form 8949 and Appendix D to declare their digital assets.
The tool can be used by individuals and accountants, as well as used as a supplement to the TurboTax program for tax reporting. Previously, the investment division of Coinbase Ventures invested in CoinTracker, but the amount of investments was not disclosed.
Lodha said that CoinTracker will help increase the legitimacy of the cryptocurrency industry and gain the trust of regulators in digital currencies. The US Internal Revenue Service (IRS) will make sure that people make legitimate transactions with cryptocurrencies and pay taxes, so the regulator’s trust in trading platforms and traders should increase.
The IRS has repeatedly sent letters to cryptocurrency investors demanding that they pay taxes on income from cryptocurrencies, which they did not report when filling out their tax return. Misrepresentation or concealment of such information is considered tax fraud in the United States. This can lead to fines, and even jail time.
Last month, the IRS added a para about cryptocurrencies to the main part of Form 1040, which is filled out by American citizens when filing tax reports. Previously, not all taxpayers could answer the question about owning cryptocurrencies.
Recall that six months ago, Coinbase began working with the IRS and the Drug Enforcement Administration (DEA), which allowed them to use the analytical tools of Coinbase Analytics to analyze the blockchain and track cryptocurrency transactions.