Tax forms: Frequently asked questions
Disclaimer: Kraken does not provide tax advice. Depending on your country's regulatory framework, you may have to pay taxes on capital gains from trading digital assets or on the value of your digital asset portfolio. You may also have to pay taxes on other income you earn such as from staking or loaning your crypto. The regulatory framework for taxation of cryptocurrencies differs from country to country. The US has not issued specific guidance addressing the taxation of staking rewards for US tax residents. We strongly advise you to contact a personal tax advisor for further information about your personal tax circ*mstances.
Tax forms are only available for eligible US clients, see more information below.
On-chain staking
An overview of eligibility criteria (including geographic restrictions) for On-chain staking can be found here.
Tax forms eligibility criteria
Who is eligible to receive Kraken tax forms?
You may receive a US tax form if:
1
You are a Kraken client, vendor or other business partner AND
2
You are a US person for tax purposes AND
3
You have earned USD $600 or more in rewards from staking or our referral program, more than USD $10 in interest or certain other income from Kraken.
All other clients or business partners are not eligible for tax forms for the tax year. This may change in future years as guidance is issued, so please monitor content in the Taxes section of our Support Center going forward for updates.
It is the client's responsibility to determine what, if any, taxes apply to the trades completed via our services, and to report and remit the correct tax to the appropriate tax authority. If you require a record of your balance or trade history, read our article on how to export your data to a CSV-file. We are currently unable to provide account history in PDF format.
Why did I receive a tax form for USD $100 (or other value less than USD $600)?
Our records likely indicate that you hold multiple separate accounts with Kraken with the same name and tax identification number combination. If together these separate accounts would exceed USD $600 when aggregated then you will be issued a tax form, but to each separate account. You should sign in to your other Kraken accounts to check for other tax forms that have been issued to you. You may also receive separate tax forms below the USD $600 threshold if you earned income from different products that exceed the threshold when combined together (such as one form for your staking rewards and a separate form for your referral program rewards).
Why did I not receive a tax form last year?
IRS guidance on how to report transactions related to cryptocurrency has been historically absent or vague and continues to develop. Despite unclear rules, a consensus has been emerging that clients wish to have this additional information.
In addition, you may not have earned enough income to exceed the reporting thresholds in prior years depending on the type of income that you earned.
Will I receive a tax form next year?
Kraken will be filing with the IRS and making tax forms available to eligible US clients and other business partners going forward. Tax form filing requirements are subject to change based on new tax laws and regulations.
Are airdrops also reported in tax forms?
Yes, funds received via airdrop are considered reportable income and are included on your Form 1099.
What if I earned staking rewards but did not sell them? Are these still reported on my Form 1099-MISC?
Staking rewards are reported to you on a US Form 1099-MISC regardless of whether you have sold the rewards or not.
How are staking rewards converted into USD on my Form 1099-MISC?
Kraken converts staking rewards into USD using Volume Weighted Average Price (VWAP). VWAP is a weighted average based on trading volume and spot price over a 24 hour period.
The formula for VWAP is: (Price of an asset in USD x % of 24 hr volume traded at that price)
Example:
John stakes DOT with Kraken, and receives 100 DOT in staking rewards on January 7th
On January 7th, DOT is trading at the following prices / volumes:
Price of DOT in USD
Amount of DOT traded
$10
1,000 DOT
$11
2,000 DOT
$12
7,000 DOT
Total:
10,000 DOT
VWAP is calculated using the following formula:
John’s staking rewards would be calculated at USD $11.60 per DOT based on the VWAP formula below:
Thus, John’s 100 DOT staking rewards would be worth USD $1,160 January 7th (100 DOT & USD $11.60 per DOT)
USD $1,160 amount would be added to his Form 1099-MISC, and the process would repeat each time he receives a staking reward
Are ETH2 rewards included on my Form 1099-MISC?
ETH rewards become reportable to you on a Form 1099-MISC in the year when they become liquid and tradeable on Kraken. MEV rewards, derived from ETH2 staking, do count towards the $600 tax form limits.You should plan accordingly with your tax advisor for this potential future taxable event.
Why do I have a reportable ETHW amount?
In addition to the ETH/ETH2 that went into client accounts as part of the ETH proof-of-staking merge around September 15th, 2022, there was also an airdrop of ETHW (proof-of-work ETH), via a "Transfer" transaction.
I believe I should have received a tax form, but did not. What should I do?
Kraken only provides tax forms to US clients and other business partners that earned:
USD $600 or more in staking rewards or certain other income during the year, or
USD $10 or more in interest income. ETH2 rewards are NOT included in this calculation.
ETH2 rewards become reportable to you when they become liquid and tradeable to you.
If you believe you should have received a tax form but did not, please reach out to Support for more information.
It is the client's responsibility to determine what, if any, taxes apply to the trades completed via our services, and to report and remit the correct tax to the appropriate tax authority. If you require a record of your balance or trade history, read our article on how to export your data to a CSV-file. We are currently unable to provide account history in PDF format.
I am a US taxpayer but I live outside of the US and I already paid taxes to the country I live in. Will I receive a tax form?
You should receive a US Form 1099 if you earned:
USD $600 or more of staking rewards or certain other income; or
USD $10 or more of certain interest income,
and you are identified as a US taxpayer in our systems.
US taxpayers generally pay tax on their worldwide income no matter where they reside. You should consult your tax advisor to determine how to calculate your taxes when you have to file in both the US and your country of residence.
Tax forms issued by Kraken
What tax forms does Kraken provide?
Kraken currently only provides a US Form 1099-MISC, a 1099-INT and 1099-NEC which is filed with the US Internal Revenue Service (IRS) and a copy is provided to you (if you are eligible). This may change in future years, as tax reporting laws are constantly changing.
What is a Form 1099-MISC?
A Form 1099-MISC is used to report staking rewards, referral program rewards, airdrops and certain other income to the US IRS earned between January 1st and December 31st each year if a client is a US person for tax purposes and has earned USD $600 or more in total. This form is used by you (if you are eligible) to prepare and calculate your taxes. The form includes a sum of staking reward income, calculated over the past year and converted to USD using the Volume Weighted Average Price on the days the rewards were credited to your account. Your Form 1099-MISC includes your name, last name, address, SSN, and public Account ID (or your EIN and business name in the case of corporate entity accounts).
What is a Form 1099-NEC?
A Form 1099-NEC is used to report certain income you might earn for services provided to Kraken between January 1st and December 31st each year. Form 1099-NEC is reported to the US IRS if a client or other business partner is a US person for tax purposes and has earned USD $600 or more in total. This form is used by you (if you are eligible) to prepare and calculate your taxes.
What is a Form 1099-INT?
A Form 1099-INT is used to report certain interest income you might earn between January 1st and December 31st each year. Only interest paid to you on a fiat currency loan is recorded on a Form 1099-INT while interest paid to you on a crypto loan is recorded on Form 1099-MISC instead. Form 1099-INT is reported to the US IRS if a client or other business partner is a US person for tax purposes and has earned USD $10 or more in total. This form is used by you (if you are eligible) to prepare and calculate your taxes.
What is a Form 1099-K? Does Kraken provide this form?
A Form 1099-K reports payments received through a 3rd party to the IRS. Generally, Form 1099-K is used by companies that facilitate payments to you for your goods or services from another party who is acting as the purchaser. For example, you may receive a Form 1099-K from the credit card company that processes card transactions for your business.
Kraken does not issue Form 1099-Ks.
What is a Form 1099-B? Does Kraken provide this form?
A Form 1099-B reports proceeds from sale of stocks and other financial instruments. Form 1099-B may also report other details of the sale such as basis and more. This form is used by US taxpayers to calculate their gains or losses from selling such instruments.
Kraken does not currently issue Forms 1099-B. Emerging US tax regulations may require reporting of cryptocurrency sales or transfers in future years. These new regulations are changing and being evaluated on an on-going basis. Please check the Taxes section of our Support Center going forward for updates.
Taxpayers of the US and other countries are likely required to calculate and pay tax on gains/losses from selling, converting or otherwise trading in crypto during the year. Your tax advisor can assist you further.
Does Kraken report taxes to the US IRS?
Kraken complies with all US IRS regulations. If you have received a Form 1099-MISC, Form 1099-NEC or Form 1099-INT then this information has been reported to the IRS. All of the information shown on your form is shared with the US IRS and the state tax agency of the state of your residence. Though your form may only display the last 4 digits of your tax ID number, the full tax identification number is shared with the US IRS and state tax agency. If any of the information is incorrect, please submit a support ticket prior to April 15 each year so we can correct your tax form before it is transmitted to the US IRS and state tax agency at the end of April. We can still amend your tax form after this date, but the IRS and state tax agencies will then receive both the original and corrected data.
Does Kraken report taxes to the state I live in?
A copy of your Form 1099 may be sent to the state of residence listed on your Kraken account. If this address is not correct, please update your address on file with Kraken by contacting Support.
What do I do with my tax forms from Kraken?
Tax forms should be used as documentation for your tax advisor, CPA or other tax professional that may prepare and calculate your taxes. You should download and keep a copy of your tax forms for your own records as Kraken will only retain these in your account history for a limited time (generally seven years, which is subject to change).
What is Kraken's Tax ID or EIN?
Kraken has a number of tax identification numbers (tax ID) which are known as employer identification numbers (EIN) in the US. Kraken also has tax ID numbers in other jurisdictions where it operates outside of the US. The tax ID of Kraken will vary, and depends on:
the country that you reside in; and
the type of product you are accessing from our platforms
As such, Kraken cannot provide a blanket statement regarding our EIN. The applicable tax ID number of Kraken will be provided in the header of the US Form 1099-MISC (or other tax form as applicable) only in the case that you are eligible to receive such tax form(s).
Accessing and viewing your tax forms
Where can I find my tax forms?
1
Sign in to your Kraken account (not via our mobile apps) at www.kraken.com/sign-in
2
Select your name in the upper-right corner of the page.
3
Select Settings.
4
Select Documents.
5
Once the documents page loads you will see a Taxes tab appear at the top, select this option.
When will my tax forms be available?
Tax forms will be issued on the below dates each year, or on the following business day if it falls on a weekend:
My address, name or other tax information reported on my forms are not correct. What should I do?
Please sign into your account and contact Kraken Support to update your information on file. You may need appropriate documentation (i.e. a bank statement, proof of address, etc.) to complete this process. After updating your information, you should expect to receive an updated tax form from Kraken.
I received an email from Kraken asking me to update my name or taxpayer identification number on my account as it does not match IRS records. Is this email legitimate?
You should always use caution when opening or responding to any email asking you to update your name or tax identification number. Kraken may need to reach out to clients occasionally to request an update to their records. This can happen if we receive information from tax authorities (like the US Internal Revenue Service) that the information we have on file for you is incorrect. Contact Kraken Support if you receive an email from Kraken that you want to confirm is not a scam phishing for your information.
How long will Kraken keep a copy of my tax forms?
In most cases, we will keep a copy of your tax forms for seven years. Please download your tax forms and keep a copy for your records.
How do I know my tax information is secure?
Kraken takes client security extremely seriously. All your information is securely stored and can only be accessed by your account - never anyone else.
Can I import my tax forms into TurboTax, TaxAct or other tax filing software?
This is not currently available. If you have registered for an account with a crypto tax aggregator software provider then you may be able to import your tax data from that provider into your tax filing software.
As an expert in cryptocurrency taxation, I bring a wealth of knowledge and experience to help you navigate the complex world of tax forms related to digital assets. My understanding extends beyond the general principles, encompassing the specific details and intricacies involved in reporting income from various crypto-related activities.
The information provided in the article addresses crucial aspects of tax forms related to cryptocurrency transactions on the Kraken platform. Let's break down the key concepts:
-
Eligibility for Tax Forms:
- US clients, vendors, or business partners who are also US persons for tax purposes are eligible.
- Receipt of a US tax form is based on earning USD $600 or more in rewards from staking, referral programs, or other income from Kraken.
-
On-chain Staking Eligibility:
- Eligibility criteria, including geographic restrictions, are outlined for on-chain staking.
-
Airdrops and Staking Rewards:
- Airdrop funds are considered reportable income and are included on Form 1099.
- Staking rewards are reported on Form 1099-MISC, regardless of whether the rewards are sold.
-
Calculation of Staking Rewards in USD:
- Staking rewards are converted into USD using the Volume Weighted Average Price (VWAP) over a 24-hour period.
-
ETH2 Rewards and Reportable Events:
- ETH rewards become reportable when they become liquid and tradeable on Kraken.
- MEV rewards from ETH2 staking count towards the $600 tax form limit.
-
Form 1099-MISC and Other Tax Forms:
- Kraken provides Form 1099-MISC, 1099-INT, and 1099-NEC.
- Form 1099-MISC is used to report staking rewards, referral program rewards, airdrops, and certain other income.
-
Reporting to IRS and State:
- Kraken complies with all US IRS regulations, reporting information to the IRS and state tax agencies.
-
Importance of Tax Forms for Tax Advisors:
- Tax forms serve as documentation for tax advisors, CPAs, or tax professionals to prepare and calculate taxes.
-
Security Measures and Information Update:
- Kraken emphasizes client security, securely storing information accessible only by the account holder.
- Clients are encouraged to update information promptly to ensure accurate reporting.
-
Accessing and Viewing Tax Forms:
- Tax forms can be accessed through the Kraken platform, and clients should regularly check for updates.
-
Tax Form Availability and Issuance Dates:
- Tax forms are issued annually on specific dates, with availability outlined on the platform.
-
Addressing Incorrect Information:
- Clients should contact Kraken Support to rectify any incorrect information on their tax forms.
-
Tax Information Import into Tax Software:
- While direct import into tax filing software is not currently available, some crypto tax aggregator software providers may offer this feature.
In conclusion, understanding the taxation of cryptocurrency transactions requires careful consideration of the specific rules and regulations in each jurisdiction. For Kraken users, staying informed about eligibility criteria, reporting requirements, and regularly checking for updates is essential to ensure compliance with tax obligations. Remember, seeking advice from a personal tax advisor is strongly recommended for navigating individual tax circ*mstances effectively.
