If you use TurboTax to file your taxes, you can have your refund sent to your Coinbase account.
The announcement demonstrates how cryptocurrency is becoming a significant aspect of the tax system.
It’s tax season. As the Internal Revenue Service becomes more aggressive in collecting on crypto income, this causes a headache for digital asset owners—but there is a small silver lining.
Due to a new agreement between Coinbase and TurboTax, crypto enthusiasts will be able to collect their refunds in the form of Bitcoin or other cryptocurrencies starting this year.
According to Dealbook, TurboTax customers can request that any refund they owe the IRS or state governments be sent directly into their Coinbase account and converted to cryptocurrency.
The development comes just a week after Coinbase announced the introduction of a free tax centre to make calculating and reporting cryptocurrency revenues easier. Coinbase also offered its customers discounts on TurboTax software as part of the announcement. (Note that the IRS also offers free tax software.)
All of this highlights how bitcoin has emerged as a prominent target for the US government in its pursuit for additional money. While Bitcoin remained mostly unnoticed for years, the first question on the basic IRS tax form now asks everyone if they hold cryptocurrency.
Of course, simply having cryptocurrency does not entail a tax obligation. Instead, the payment is owed if you benefit from it when you sell it or through activities such as staking, which is locking up a crypto asset for a specified amount of time in order to earn yield. When it comes to trading gains, the amount owing is determined by how long you kept your cryptocurrency before selling it. (If you have had it for less than a year, it will be taxed as basic income; if you have had it for more than a year, it will be taxed at the lower capital gains rate.)
Coinbase’s offer of a crypto refund symbolises the company’s evolution into a bank and a well-established part of the United States’ financial infrastructure. This could aid the corporation in the long run as it deals with regulatory entities who are still hostile to cryptocurrency.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.