U.S.-based cryptocurrency exchange Coinbase has integrated tax-filing software TurboTax to make it easier for its clients in the United States. Then crypto exchange and Intuit Consumer Tax Group, the creators of TurboTax, announced their partnership on Tuesday January 22.
The agreement will allow Coinbase.com users and Coinbase Pro clients to have their crypto transactions analyzed to determine how to file their tax.
How TurboTax works for Crypto Users
According to a blog post published on the Coinbase website, the cryptocurrency customer would first download his cryptocurrency transaction history from Coinbase platform and upload same to the crypto tax section of Intuit’s TurboTax Premier to analyze and determine how to file crypto tax for the past period.
Coinbase noted that the integration allows TurboTax Premier to pull transaction history form the Coinbase mobile apps (iOS and Android) but not for Coinbase Pro users. Though the TurboTax Premier comes with its own fees, Coinbase customers can get a discount of up to $20 when they upload over 100 transactions, gains and losses via a discount link provided by the exchange.
Intuit promised to provide assistance to crypto users through their products and certified agents. The explained that “not every cryptocurrency transaction constitutes a taxable event, which is why we have tons of guidance to assist you in understanding and selecting which transactions are taxable while you are in TurboTax Premier.”
Coinbase Crypto tax Efforts
Coinbase has a checkered history with the U.S. tax watchdogs the Internal Revenue Service (IRS). As Smartereum reported the crypto exchange was forced to release transaction and account details of 13,000 of its users after a prolong court case after an IRS summons originally requesting the release of details of 500,000 accounts due to tax investigation.
Since then, Coinbase has tried to educate its users about tax and furnishing them with tax resources and tools to avoid tax concerns. The other time the exchange introduced a crypto tax calculator which helps users determine their crypto taxes. It also launched a dedicated tax page to address issues reading crypto tax filing. But filing taxes for cryptocurrency gains have not been the easiest thing to do.
Difficulty in Filing Crypto tax
Several stakeholders in the cryptocurrency sectors have called for revised guidelines for crypto currency taxation noting that the current guideline is dated and does not consider the current realities in the cryptocurrency space. To add to this call, some U.S. legislators wrote the IRS last year seeking clearer crypto tax guidelines.
As Smartereum reported, representatives David Schweikert, Darin LaHood, Brad Wenstrup, Lynn Jenkins, and Kevin Brady in an open letter dated Sept. 19, 2018, wrote:
“We therefore write again today to strongly urge the IRS to issue updated guidance, providing additional clarity for taxpayers seeking to better understand and comply with their tax obligations when using virtual currencies.”
The tax filing gets even more complicated when a crypto trader transacts across several exchanges.
Cointracker and Other Crypto tax Resources
Coinbase also announced that it has also integrated CoinTracker, a crypto tax software manager that calculates cryptocurrency across wallets and exchanges. The software designed by ex-Google employees supports over 2500 cryptocurrencies and is integrated with 20 top crypto exchanges, according to information on its website.
According to crypto news outlet Coinbase, CoinTracker co-founder Chandan Lodha was quoted as saying:
“We can’t have an open financial system if it is too difficult to use, or restricted to certain groups. Therefore, we have a simple mission: make cryptocurrency easier to use. We are starting by tackling cryptocurrency taxes.”
Coinbase used the blog post to announce its Crypto Tax Resource Centre meant to advice its regular and Pro customers about their cryptocurrency tax obligations. In addition to this, Coinbase said it is partnering with other crypto tax services like Bitcoin.tax, BitTaxer, CryptoTrader.tax and TokenTax.co to help its customers.
However, Coinbase warned that its efforts do not amount to professional tax advice as users are required to seek help from certified tax professionals.
Solomon Sunny is the market reporter for Smartereum, one of the global leaders in Ethereum, blockchain and currency news. He produces technical price updates on digital currencies and writes recent developments about blockchain.