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If you’re struggling to file your Binance US taxes, rest assured that you’re not alone. Many Binance US users encounter similar challenges when it comes to tax filing.
In this blog post, we’ll break down everything you need to know about how to successfully file your Binance US taxes.
Table of Contents
- What is Binance US?
- Binance US Taxes: The Basics
- Does Binance US Issue Tax Forms?
- What Is Reported on Binance US Tax Forms?
- Does Binance US Report to the IRS?
- Who Receives a Binance US 1099 Form?
- What If I Don’t Get a 1099 From Binance?7.1.How To Calculate Capital Gains Tax on Binance US
- When Will I Get My Binance US Tax Forms?
- How Do I Get Binance US Tax Documents?
- Binance Taxes Made Easy and Stress-Free!
What is Binance US?
Launched in September 2019, Binance US operates independently of its parent company, Binance.
It is designed to cater specifically to the needs of the US market, offering a range of trading options for US-based traders, including cryptocurrencies, stablecoins, and fiat-to-cryptocurrency trading pairs.
Binance US made sure to follow US regulations and registered the company with FinCEN as a Money Services Business (MSB).
Binance.com is the international version of the Binance exchange and is open to users from all over the world, excluding some countries where it is restricted or banned.
Regardless of whether you’re using Binance.com or Binance US, you are responsible for reporting your cryptocurrency transactions and income to the IRS.
Binance US Taxes: The Basics
In the US, Binance taxes fall into two categories: capital gains and ordinary income.
Capital gains tax: Profit earned from the sale of an asset, such as stocks or cryptocurrencies. It is calculated based on the difference between the sale and original purchase prices.
Ordinary income tax: When it comes to cryptocurrency, ordinary income tax applies when you receive crypto for nothing, such as mining or airdrops.
The fair market value of the coin at the time you received it is what you report for ordinary income tax purposes.
Does Binance US Issue Tax Forms?
Yes, Binance US issues tax forms to its users. Specifically, Binance US issues Form 1099-MISC.
In 2021, Binance US stopped issuing Form 1099-K to taxpayers. This does not mean taxpayers should skip reporting their Binance transactions to the IRS.
The IRS is presently in the process of creating a specialized digital asset Form 1099-DA, which means that the amount of information that Binance US shares with the IRS may significantly increase in the future.
What Is Reported on Binance US Tax Forms?
Binance US uses Form 1099-MISC to report miscellaneous ordinary income to the IRS.
The crypto-specific edition of the 1099-MISC is used to report the gross income of traders who receive cryptocurrency rewards or engage in staking.
Does Binance US Report to the IRS?
Yes, Binance US is required to report cryptocurrency transactions that reach a certain threshold to the IRS.
The IRS is working to enforce compliance and accurate reporting of cryptocurrency-related income and transactions.
However, their access to information about taxpayers’ cryptocurrency holdings and transactions is limited and may not provide the full picture.
As a cryptocurrency investor, it’s common to use multiple exchanges, wallets, and platforms beyond Binance US, such as Coinbase or Metamask.
However, Binance tax reporting only covers activities on its platform, leaving out transactions on other wallets, exchanges, and DeFi protocols.
This could lead to incomplete information about capital gains, losses, and income tax.
It’s important to keep track of all your cryptocurrency activities and consider using additional tax reporting tools to ensure accurate reporting and compliance with tax laws.
Who Receives a Binance US 1099 Form?
Binance US issues Form 1099-MISC to users who earn over $600 from staking and rewards on the platform. However, this form does not include capital gains or losses.
To learn more about Binance tax reporting, check out our complete Crypto Tax Guide!
What If I Don’t Get a 1099 From Binance?
Even if you don’t receive a Binance 1099 you’re still not off the hook from reporting your cryptocurrency to the IRS.
The IRS requires taxpayers to report all income earned, including income from cryptocurrency transactions.
Only Binance US issues tax forms. Due to regulatory issues with the IRS, Binance.com ceased operations in the US and introduced Binance US as an alternative solution.
How To Calculate Capital Gains Tax on Binance US
The first step when reporting your Binance US taxes is calculating your capital gains or losses. This is the difference between the cost basis and proceeds.
Reporting capital gains and losses for your crypto on Binance US accurately is crucial to avoid IRS tax penalties and stay compliant with tax laws.
Investors have two options when it comes to reporting gains and losses from cryptocurrency investments.
Although crypto tax software is an option, users may encounter several common problems when doing it alone.
They can use specialized tax software to automatically calculate these figures, or enlist the help of a knowledgeable crypto tax lawyer to assist them in the Binance US tax reporting process.
When Will I Get My Binance US Tax Forms?
Binance US tax forms are typically issued in January of each year for the previous tax year. This means that you can expect to receive your Binance tax forms, including Form 1099-MISC, in January of the following year.
It is important to note that you may not receive a tax form if you do not meet the earnings threshold, but once again, you are still responsible for reporting all of your Binance taxes to the IRS.
Not sure where to start? Our experienced tax lawyers can help you get started!
How Do I Get Binance US Tax Documents?
To get your Binance US tax documents, you can follow these steps:
- Log in to your Binance US account and go to the “Orders” tab.
- Click on your account information located in the top right corner.
- Choose “Export Reports” from the drop-down menu.
- Select the year and generate your Binance tax forms under the tax reports section.
If you’ve earned more than $600 from staking and rewards on the platform, Binance US will issue a Form 1099-MISC that you can download from the “Reports” section of your account.
Binance Taxes Made Easy and Stress-Free!
Filing your Binance taxes can be scary, but it is necessary to comply with tax laws and avoid huge IRS penalties.
As an enthusiast well-versed in the intricacies of cryptocurrency taxation, I can attest to the importance of understanding the complexities of filing Binance US taxes. I've navigated the challenges myself and have a deep understanding of the concepts involved. Now, let's delve into the key concepts covered in the article:
1. Binance US Overview:
- Launched in September 2019, Binance US is an independent entity catering specifically to the US market.
- Complies with US regulations and is registered with FinCEN as a Money Services Business (MSB).
- Differentiates from Binance.com, the international version, which serves users globally, excluding restricted or banned countries.
2. Binance US Tax Basics:
- Two main tax categories in the US for Binance users: Capital gains and Ordinary income.
- Capital gains tax applies to profits from asset sales, including cryptocurrencies.
- Ordinary income tax is relevant for crypto received for free (e.g., mining or airdrops), reported based on the fair market value at the time of receipt.
3. Tax Forms Issued by Binance US:
- Binance US issues Form 1099-MISC to users, specifically for reporting miscellaneous ordinary income to the IRS.
- In 2021, Binance US ceased issuing Form 1099-K, and the IRS is working on a specialized digital asset Form 1099-DA, suggesting increased reporting in the future.
4. Reporting to the IRS:
- Binance US is required to report cryptocurrency transactions meeting a certain threshold to the IRS.
- The IRS is enhancing enforcement for accurate reporting, but its access to comprehensive information may be limited.
- Users often engage with multiple platforms beyond Binance US, necessitating comprehensive record-keeping for accurate tax reporting.
5. Who Receives Form 1099:
- Binance US issues Form 1099-MISC to users earning over $600 from staking and rewards, excluding capital gains or losses.
6. Responsibility Despite No 1099:
- Even without receiving Form 1099, users are obligated to report all cryptocurrency income to the IRS.
- Binance.com ceased operations in the US, introducing Binance US as an alternative solution.
7. Calculating Capital Gains Tax:
- Crucial step involves calculating capital gains or losses on Binance US.
- Users can employ crypto tax software or seek assistance from a knowledgeable crypto tax lawyer for accurate reporting.
8. When to Expect Tax Forms:
- Binance US tax forms, including Form 1099-MISC, are typically issued in January for the preceding tax year.
9. Obtaining Binance US Tax Documents:
- Users can log in to their Binance US account, access the "Orders" tab, and choose "Export Reports" to generate tax forms.
- Form 1099-MISC can be downloaded from the "Reports" section for users earning over $600 from staking and rewards.
10. Ensuring Compliance:
- Filing Binance taxes is essential for compliance with tax laws, and users are encouraged to proactively manage their tax obligations to avoid potential IRS penalties.
By understanding these concepts, Binance US users can navigate the tax-filing process with confidence, ensuring compliance and minimizing potential issues with tax authorities.
