How do I file my taxes for cryptocurrency?

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The following information is for educational purposes only and does not constitute an endorsement of this type of cryptocurrency. Consider seeking tax and financial advice from licensed professionals. The cryptocurrency service is currently available to PayPal Balance accounts and certain eligible US-based business account holders only.

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Here is a list of some of the documents necessary to have when preparing your annual tax returns for cryptocurrency with the IRS:

IRS Form 1099-MISC

• For U.S. taxpayers, the IRS requires companies that make certain types of payments to provide the recipient of such payments and the IRS with a 1099-MISC. This form provides information for a wide range of income payments, such as interest earned on digital currencies, referral bonuses, and other income. If you’ve earned $600 or more this year in crypto interest or bonuses, the 1099-MISC will be made available by the platform that issued the payments during the taxable year.

• PayPal will only send you this form by January 31 if it applies to the preceding year's payments.

IRS Form 1099-K

• PayPal is required to provide information to the IRS about US taxpayers who receive payments for the sale of goods and services above the reporting threshold in a calendar year. If you received payments for goods or services transactions over the annual threshold, PayPal would send you this form by January 31 applying to the preceding year’s payments.
• Visit Will PayPal Report My Sales to the IRS? for more information.

• IRS Form 8949
  • When you sell or engage in other dispositions of cryptocurrency, the IRS requires the details of the transaction to be reported on Form 8949, “Sales and Other Dispositions of Capital Assets”. Taxpayers are required to prepare and submit form 8949; PayPal will not provide this.
• Year End Gain/Loss Statement
  • PayPal will provide your year-end gain/loss statement, which will detail each asset you bought or sold throughout the year. This form includes your cost basis, when available, for the assets you bought and sold on the platform. This statement contains information that is typically provided on Form 8949. The information provided by PayPal is not intended to be and should not be construed as tax advice.
  • PayPal calculates the cost basis (based on Highest In/First Out cost basis method) and corresponding gains or losses on every transaction, when available. You should consult your tax advisor regarding which cost basis method is appropriate for your specific situation.