Should I import crypto exchange 1099 Misc and Koinly tax report into TurboTax?

[user314]

I earn interest/rewards on a few crypto exchanges, and they have all supplied me 1099 Misc forms. I believe they also supply the IRS a copy of the 1099 Misc so the IRS will know if I exclude them from my tax filing.

I use Koinly, a paid crypto aggregating and tax calculating service, to aggregate all my transactions on all my exchanges, wallets and defi into one tax report. My koinly tax report is complete and has everything on it.

Should I import my 1099 Misc from my various exchanges into TurboTax in addition to importing my koinly tax report? Will TurboTax deduplicate the transactions?

Or should I just import the koinly tax report and skip the 1099 Misc's (since those transactions are included in koinly report anyway); but will not including those 1099s trigger an audit?

[user314]

I just got to the 1099 section and didn't know how to proceed.  I know I have to import my Koinly report, because otherwise there is no way to get all my defi transaction in (aside from doing it manually which would take forever). I'm just not sure if I should also import my 1099's from Coinbase, Celsius, etc. because they will be duplicate transaction (already included on Koinly report)...but I'm concerned about not including them because I know the IRS is expecting them.

[JohnB5677 · Accepted solution]

Yes, you should download, but not import all of your reporting forms.  By the download, I mean you want to be able to view them without importing them into TurboTax.

You mentioned that you earned interest, I suspect this was from staking, and it's taxable when you receive it.

Staking will generate passive income.  This is similar to getting interest in a checking account.

1. Staking will be taxed in the year that you receive it (Taxed as USD)

2. Posted to Wages & Income

3. Less Common Income

4. Miscellaneous Income, 1099-A, 1099-C

5. Income from renting out personal property (not rental real estate or farm rentals)

Now you can view and evaluate all of the downloaded documents and determine which you will need to include all of the Crypto transactions and import them into TurboTax.

[kdarrow1]

I am not clear on your answer.  I received 1099-MISC from BlockFi from crypto interest.  I also used Koinly to sync many crypto platforms  which did not send a 1099-MISC.  However to make Koinly work best you need to import everything even from platforms like Blockfi which provide a 1099-MISC.  Right now I have everything accounted for on Koinly including the BlockFi transactions.   The issue is can I not enter the BlockFi 1099-MISC since the data was picked-up by Koinly and the Koinly file imported into Turbo Tax?  Or do I need to somehow figure out how to turn off BlockFi transactions in Koinly then import a file from Koinly only for platforms that did not send me a 1099-MISC?  Is the IRS going to be looking for a BlockFi 1099-MISC to be entered as a 1099-MISC stand alone or will it all come out in the wash when imported via Koinly.

[AmyC]

The IRS has the form and is simply looking for the income to be reported. As long as all income is accounted for, you will not have a problem. The first system check is matching income totals.  Choose what works best for you and make a note of what you did in case you are audited in 3 or 4 years.

@kdarrow1