Coinbase new user incentive

[bill-orange]

I opened a Coinbase account in 2021.  I was given a $5 new user incentive in bitcoin.   I have no other Crypto activity what so ever.

Do I answer the Crypto question in the top of form 1040 YES or NO?  If YES would I put the $5 in 1099-MISC?  Would I have to do anything else?

[emilclu]

If coinbase generated a 1099 yes, if not no.

[bill-orange]

They did not.  Apparently the 1099 is triggered at $600 gain/loss.  The lack of a 1099 doesn't change the reporting requirement or the question I believe.  If you get $0.99 in bank interest you are still supposed to report it, although I double many do.

[emilclu]

If a 1099 was not generated then no reporting was done to IRS.  So IRS won't know transaction existed.  However, It's up to you whether or not you want to report.

[emilclu]

Also, I find it hard to believe that threshold is $600 as IRS must mandate lower reporting dollar amounts.  I thought it was $15.

[RaifH · Accepted solution]

Yes to both. You would answer Yes to the question about cryptocurrency and you would need to enter the $5 as Other Income: 

1. With your return open, go to Federal > Wages & Income
2. Open the Less Common Income section and start or revisit the last entry, Miscellaneous Income, 1099-A, 1099-C.
3. On the next screen, start/revisit the very last entry, Other Reportable Income, and answer Yes on the following screen.
4. On the next screen, enter a description (for example, "Coinbase Bitcoin Reward") and then enter the total USD amount.
5. Select Continue when finished.

If you do end up selling this at some point down the road, the basis for it will be the $5 you are reporting as income in 2021. 

[bill-orange]

Just to finish to thought, I answer YES, enter the $5 in 1099-MISC and nothing else is required.  Is that correct. 

To answer the question above not specifically related to my tax situation, Is the reporting limit for Coinbase $600 or $15.  Just curious.

[RaifH]

Yes, it sounds like you have correctly reported to the IRS that you have cryptocurrency and have reported the income from your Coinbase reward.

Coinbase only issues a 1099-MISC if you have received miscellaneous income in excess of $600. They do not release a 1099-B but they do have gain/loss reports that can be downloaded and imported into TurboTax. They are likely to start releasing 1099-Bs for sales of cryptocurrency in future years due to changes in the tax law. They used to issue 1099-Ks but stopped doing so in 2020. 

As you said above, all income is taxable regardless of whether or not you receive a form.