Kraken is one of the oldest and largest cryptocurrency exchanges available to American traders, so the question of whether the exchange reports users’ transactions to the tax authorities is often on people’s minds.
Kraken absolutely does report to the IRS. But let’s go deeper into the specifics of which forms they use, which activities they report, and how you can best navigate reporting your Kraken transactions to the IRS.
Which forms does Kraken use to report?
Straight from the horse’s mouth, here is what Kraken outlines on their FAQ page:
“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.”
“Well, that’s nice,” you’re probably thinking. “But what exactly are all of those forms, and what do they cover?”
In the IRS’s very long list of forms and documents, the Form 1099 series covers additional or other incomes – meaning money acquired from a source other than your day job. Form 1099s can cover a wide range of incomes, such as investments, rent, and profits from cryptocurrency trading or sales. Specifically, Kraken will send the IRS these tax forms on any US account that earns more than $600 per year.
Please note that for the purposes of this article, a “year” refers to a taxable year, meaning the period from January 1 to December 31.
What types of income do Kraken’s 1099s deal with?
Form 1099-MISC is used to report staking rewards and related kinds of income. “Staking” means locking up your crypto to validate transactions for certain cryptos using proof of stake. By locking up your crypto in this way, you can earn a reward for your participation in the process of validation of the transactions on the blockchain.
Form 1099-NEC lists any income you’ve earned while doing certain things for Kraken that led to Kraken compensating you – essentially, completing work for Kraken without being employed by them. It’s basically a form used to track income you earn while being a non-employee, and you’ll only get sent this if you’ve earned more than $600 per year doing this type of work.
And finally, Form 1099-INT encompasses any income you’ve earned in interest from your crypto holdings on Kraken. Unlike the two prior forms, you get the 1099-INT for almost any amount of profit, even if you’ve made as little as $10 in interest in a year.
Wait, That’s It?
Surprisingly, Kraken only deals with those three specific 1099 forms. According to the Kraken FAQ, the company does not issue 1099-Bs (which deal with profit from stocks) or 1099-Ks (which handle third-party income). Kraken also can’t give you fully complete tax forms for all the crypto assets you hold across all crypto programs, as they ultimately only have information about what you do on their platform. Basically, any other wallets, exchanges, and DeFi protocols are beyond Kraken’s reach to report on your behalf.
That being said, always be on the lookout for updates on Cointelli’s blog and in the news. The world of crypto taxes is constantly in flux, and Cointelli makes all the latest information available for our users.
So How Can I Deal with These Kraken 1099s?
These forms look complicated, right? This is where your friends at Cointelli come in to lend a helping hand. We’ve made filing your crypto taxes as easy as possible to save you time, money, and a massive headache!
First, you’ll need to sign up for free on Cointelli to get access to our service. Cointelli handles your Kraken account with great care, pulling data on a read-only basis (with your help!) and backing you up with in-depth tutorials in text and video formats to get you through the process. All you need to do is add the API keys you’ve generated from Kraken into the correct fields.
You may have to wait a little bit while Cointelli finishes importing and sorting your Kraken assets (don’t forget to import transactions from any other wallets and exchanges you use too). But you’ll soon see your data neatly organized for your convenience!
Once you’ve completed your review and are satisfied that your transactions from Kraken and other platforms have been accurately recorded, Cointelli will automatically generate a tax form that you can send to tax software like TurboTax or your tax professional. And believe it or not, all that ease and convenience comes for the all-inclusive price of just $49!
We hope the above has enlightened you not only regarding whether your Kraken transactions are reported to the IRS, but on how you can handle your crypto taxes quickly, easily, and effectively.
When the time comes to pay taxes on your crypto earnings, consider using Cointelli’s powerful and straightforward system to make your tax filing a breeze. It’s a decision you won’t regret.
Got any crypto tax questions? Ask us on Twitter! Our co-founder & crypto tax expert Daniel @Cointelli_Dan will answer you directly!