Crypto Tax Season | What BlockFi Clients Can Expect
09-17-2020, 11:51 53
Copyright on text and image: BlockFi.com
Figuring out how to pay taxes on your crypto can be maddening. BlockFi is dedicated to helping clients manage their crypto wealth, including by providing efficient tax reporting support.
BlockFi Interest Account (BIA) holders earn market leading interest rates on their crypto. Earning crypto income is generally understood to be a taxable event in the eyes of IRS, the chief tax regulator in the United States. The IRS has determined that cryptocurrencies are generally treated as property for tax purposes – other forms of property include commodities such as gold and the stock of public companies. BlockFi’s tax advisors have therefore determined that crypto interest paid to clients is a payment of property, subject to reporting via a form called a 1099-Miscellaneous or “1099-MISC.”
1099-MISCs are generally used to report amounts paid to recipients like BlockFi’s clients who are not employees of the payer (BlockFi). Recipients of these forms need to include them with their annual tax return. Clients that use tax service preparation software will typically be asked if they earned any 1099 or other income. Otherwise, clients can give the form to their professional tax preparers.
In the last week of January, BlockFi will mail 1099-MISC forms to clients who earned $600 or more of interest and bonuses in 2019. These forms will also be made available electronically upon request. The value of the income earned will be in “Box 3” of the form, for “Other Income.” This value is based on the USD value of the interest & bonuses paid to clients as of the effective date of each monthly payment – these amounts are also reflected on each client’s monthly BIA statements. Further, these amounts also become the cost basis for the crypto income, an important input if the crypto is sold after receipt.
Clients who earned less than $600 in interest and bonuses will not receive a 1099-MISC, but should still report any crypto income amounts on their tax returns.
As always, clients should consult with their tax advisors for information relating to their specific facts and circumstances. For more information on leading crypto tax solutions, see our post here For everything else, contact BlockFi anytime. Call us at +1 (646) 779-9688 or email us at firstname.lastname@example.org.
– The BlockFi Team
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