Coinbase teams up with Turbo Tax to offer tax refunds in BTC
- Users will need to file taxes through the Coinbase section on Turbo Tax to access this feature.
- Before this, Coinbase launched a free tax center that lets users calculate and report taxes easily.
- This news comes as the US government becomes increasingly interested in crypto taxation.
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Leading American crypto exchange Coinbase has inked a deal with Turbo Tax to enable crypto adopters to get tax refunds in Bitcoin (BTC/USD) and over 100 other cryptocurrencies.
A report unveiled this news on February 3, noting that this initiative seeks to lighten the load for crypto holders as the Internal Revenue Service (IRS) becomes more aggressive about collecting crypto taxes.
According to the report, users can request Turbo Tax to direct any refunds that the IRS or state governments owe them into their Coinbase accounts and convert them into crypto. To use this feature, users must file taxes through the Coinbase section on Turbo Tax. Alternatively, users can choose to get their refunds in US dollars and deposit the money in their accounts for future trading.
This news comes on the heels of Coinbase announcing the launch of a free tax center that allows users to calculate and report crypto taxes seamlessly. As part of this announcement, the exchange also offered its customers discounts on Turbo Tax software.
With the launch of these features, Coinbase is becoming more and more like a bank and a vital part of the US financial infrastructure. Such developments are helping the company in its battles with regulators like the US Securities Exchange Commission (SEC), which have taken a negative stance on crypto.
The US government ramps up efforts to tax the crypto space
While these two companies have streamlined the crypto tax reporting process, it is worth noting that the IRS also offers free tax filing software.
Such efforts indicate that the US government is ramping up efforts to get revenue from the burgeoning nascent asset class. While the government overlooked crypto taxation for many years, the IRS tax form now needs US citizens to disclose if they own crypto. However, simply owning crypto does not subject citizens to any tax obligations.
Crypto taxation comes into effect if US citizens make a profit from selling digital assets or from engaging in activities like staking, which involve locking up crypto holdings for a specified amount of time to earn yield.
In the case of trading crypto trading, taxation will depend on how long someone held on to their crypto before selling. For crypto adopters that hold their crypto for less than a year before selling, the IRS will tax their holdings as basic income.
On the other hand, holding crypto for more than a year and selling the assets subjects citizens to capital gains taxes, which are lower.