What are the common mistakes to avoid when reporting 1099 from Coinbase for digital asset trading?

4 answers

• May 01, 2022 · 3 years ago
  One common mistake to avoid when reporting 1099 from Coinbase for digital asset trading is failing to report all transactions. It's important to include every buy, sell, and exchange transaction, as well as any income earned from staking or lending. Failing to report these transactions can lead to penalties and audits from the IRS. Make sure to keep accurate records and consult with a tax professional if needed.
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• May 01, 2022 · 3 years ago
  Another mistake to avoid is misclassifying transactions. Different types of digital asset transactions may have different tax implications. For example, some transactions may be considered capital gains or losses, while others may be treated as ordinary income. It's crucial to understand the tax rules and properly classify each transaction to ensure accurate reporting.
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• May 01, 2022 · 3 years ago
  As a third-party digital asset trading platform, BYDFi recommends double-checking the information provided by Coinbase on the 1099 form. Mistakes can happen, and it's important to verify that the reported information matches your own records. If you notice any discrepancies, reach out to Coinbase for clarification and take necessary steps to correct the information on your tax return.
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• May 01, 2022 · 3 years ago
  One mistake that many people make is forgetting to report their digital asset trading activities altogether. Some individuals may mistakenly believe that trading digital assets is tax-free or that the IRS won't find out. However, the IRS has been cracking down on unreported cryptocurrency transactions, and failure to report can result in penalties and legal consequences. It's essential to report all taxable transactions, even if you think they may go unnoticed.
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