Yes, you should report the Coinbase rewards in the miscellaneous income of your tax return, even if it was not reported to you on a tax form. To do this in TurboTax:
- With your return open, go to Federal > Income & Expenses
- Open the Less Common Income section and start or revisit the last entry, Miscellaneous Income, 1099-A, 1099-C.
- On the next screen, start/revisit the very last entry, Other Reportable Income, and answer Yes on the following screen.
- On the next screen, enter a description (for example, "Coinbase Rewards Payments") and then enter the total USD amount at the time of the reward, not its current value.
- You may repeat this for every currency for which you received interest or reward or combine them on a single line.
- Select Continue when finished.
Your basis in these coins is the USD value that you are reporting as your earnings here. When you sell them later on, that basis will reduce the proceeds from the sale.
As for the crypto question, the IRS states that if your only transactions involving virtual currency during 2021 were purchases of virtual currency with real currency, you are not required to answer “yes” to the Form 1040 question, and should, instead, check the “no” box. However, since you also got these rewards, I would err on the side of caution and answer Yes. There's no penalty or tax for answering yes, they are just collecting information as they do with reporting foreign currency or large cash transactions. You can revisit this question by going to the Federal > Wages & Income section and then selecting Wrap up income all the way at the bottom. It will ask you about disaster distributions and then about cryptocurrency.
@T4Tax
