Cryptocurrency exchange Coinbase has partnered with tax software provider CoinTracker to make it easier for its users to file tax returns.
CoinTracker co-founder Chandan Lodha said the service will allow Coinbase US users to calculate profits and losses from cryptocurrency transactions. 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, and can also be used as a supplement to the TurboTax program for preparing tax reports. Previously, the investment arm of Coinbase Ventures invested in CoinTracker, but the amount of the investment has not been disclosed.
Lodha said CoinTracker will help increase the legitimacy of the cryptocurrency industry and gain regulatory confidence in digital currencies. The IRS will make sure that people make legal transactions with cryptocurrencies and pay taxes, so the regulator’s confidence in trading floors and traders should increase.
The IRS has repeatedly sent letters to cryptocurrency investors demanding that they pay taxes on income from cryptocurrencies that they did not report when filing their tax return in 2018. Misrepresenting or hiding such information is considered tax fraud in the United States. This can lead to checks, fines and even jail time.
Last month, the IRS added a cryptocurrency clause to the main body of Form 1040 that American citizens fill out when filing tax returns. Previously, not all taxpayers could answer the question of owning cryptocurrencies.
As a reminder, six months ago, Coinbase began partnering with the IRS and the Drug Enforcement Administration (DEA), which allowed them to use Coinbase Analytics’ analytical tools to analyze blockchain and track cryptocurrency transactions.
