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Marley4
New Member

Got 1099-B for crypto payments from CashApp

Hello,

I am a sole proprietor who does web design/development and I accept crypto as income. I was expecting to receive a 1099-K instead of 1099-B for my transaction. 

I received compensation for my work and immediately sold the crypto to USD. I was planning on filing Schedule C with the total proceeds from the 1099-B form I received from CashApp. 

my question is, will that be fine to do so?

 

will I have any issues? I am basically just going to report all proceeds as basically income. 

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4 Replies

Got 1099-B for crypto payments from CashApp

Are you unable to contact the company and get the correct reporting form?

rjs
Level 15
Level 15

Got 1099-B for crypto payments from CashApp

I believe you have two separate transactions that both have to be reported on your tax return.


Transaction 1: You received crypto as payment for your work. That is business income on Schedule C. You report it like any other business income. The amount of the income is the value of the crypto at the time that you received it. Apparently you did not receive any reporting form, such as a 1099-NEC or 1099-MISC, from the person or company that paid you for the work. But as I am sure you are aware, you still have to report the income.


Transaction 2: You sold the crypto. That is an investment sale. The 1099-B from Cash App reports this investment sale. You have to report it as an investment sale on Schedule D (probably with Form 8949). Your gain or loss on the sale is probably zero or very close to zero, but you still have to report the sale.

 

Marley4
New Member

Got 1099-B for crypto payments from CashApp

Hey, thanks for your response!

 

So I am on TurboTax self filing and when i do report the two separate transactions it will add both up and make my income 2x than what it is. So i figured it would be more simple to just report the total proceeds as business income. 

 

This is so confusing to me but also so simple, I think i am doing the right thing but just have the unsure feeling. 

rjs
Level 15
Level 15

Got 1099-B for crypto payments from CashApp

It will not double your income. The amount of income from the investment sale is the gain (profit), not the proceeds (the amount you received from the sale). Since you sold it almost immediately, your gain will be zero or very close to zero, as I said earlier. So yes, it adds both transactions to your income, but for the second transaction it is adding zero.


Your gain on the sale is the proceeds shown on the 1099-B, minus your basis. The proceeds is the dollar amount that you received for the crypto. Your basis is probably not shown on the 1099-B. It's the value of the crypto when you received it, which is the amount that you report as business income. Since you sold it right away, the value probably changed very little from when you received the crypto until you sold it, so you will have a very small gain or loss, possibly zero.


You have to report the sale on your tax return, because the IRS gets a copy of the 1099-B. If it's not on your tax return you will get a notice from the IRS, with a bill for additional tax. They don't know your basis, so they will assume that your basis (not the gain) is zero. A zero basis would make the entire amount that you received taxable profit, and they will tell you to pay tax on that amount. The result is that NOT reporting the sale will double your income, as far as the IRS is concerned. The way to avoid having the income doubled is to report the two transactions, as I suggested.

 

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