What to do with your 1099-K from Coinbase
That large number on the form is gross payment volume, not profit, and it does not set your cost basis. Here is what the form actually reports, why it looks bigger than anything you made, and how to square it with your return.
A 1099-K from a crypto exchange throws a lot of people. The dollar figure on it can be far larger than anything you made, and it shows up with no explanation of how it was calculated. The form is not a tax bill, and the number on it is not your income. It reports gross payment volume that ran through your account, and the IRS gets a copy of the same form. Whether or not one landed in your mailbox, your job is the same: report your actual gains and losses, backed by your own records.
What a 1099-K reports
Form 1099-K is an information return for payments settled through a third-party network. It shows the gross amount of reportable transactions, with no adjustment for fees, cost basis, or losses. The figure is a running total of proceeds, not a measure of what you earned. Each transaction is counted at its value on the date it settled.
Because the form ignores what you paid for a coin, the gross number can dwarf your taxable gain. Buy at $9,000, sell at $10,000, and the 1099-K reflects the $10,000 in proceeds while your actual gain is $1,000. Trade in and out of positions across a year and those proceeds pile up fast, even when your net profit is small or negative.
Why Coinbase sent one, and why you might now get a different form
Exchanges issue a 1099-K to accounts that clear a payment threshold. For years that threshold was more than $20,000 in gross payments across more than 200 transactions in a calendar year, with a few states setting lower triggers. Coinbase applied that standard mainly to business and higher-volume accounts, which is why plenty of ordinary investors never received one.
The forms have moved on since then. Coinbase stopped issuing the 1099-K for trading activity after the 2020 tax year. For sales made on or after January 1, 2025, custodial brokers, Coinbase included, report gross proceeds on Form 1099-DA, the digital-asset broker form. Cost-basis reporting on the 1099-DA phases in for assets acquired starting in 2026, so early versions of that form can also show proceeds without basis, the same gap that made the old 1099-K look alarming. If the form in your hand is a 1099-K, it most likely covers an earlier year. The way you reconcile it has not changed.
You owe tax on gains, form or no form
The threshold decides who receives a form, not who owes tax. Every sale, trade, or use of crypto to pay for something is a disposal, and each disposal is a taxable event. Swapping one coin for another is a disposal. So is spending crypto on goods or services, and so is selling for dollars. If you had gains, they are reportable whether a 1099 arrived or not.
Form 1040 also asks a direct question near the top about whether you received, sold, exchanged, or otherwise disposed of a digital asset during the year. Answer it honestly. It applies to every filer, not only to people who got a form.
How to report it
Start with your cost basis: what you paid for each coin, including fees, on the day you acquired it. The 1099-K does not give you basis; it only lists proceeds. You supply the basis yourself, from your own purchase records.
Report each disposal on Form 8949 with the asset, the date you acquired it, the date you sold it, the proceeds, your basis, and the resulting gain or loss. Holding period matters, since anything held a year or less is taxed at short-term rates and longer holdings at long-term rates. The totals from Form 8949 carry to Schedule D.
Your Form 8949 totals will not match the gross figure on the 1099-K, and they are not meant to. The form shows proceeds; your return shows gains after basis. What the IRS wants is that you can explain the difference. Keep the exchange exports, purchase confirmations, and transfer records that support your numbers.
A pro who reconciles these forms for a living can turn a scary gross figure into the gain you actually owe on. We'll match you with one.
Get matched with a crypto-tax pro →If the form looks wrong
Exchange-issued forms are not always right, especially when coins moved between wallets or platforms and the exchange could not see your full history. If the proceeds on your 1099-K or 1099-DA do not match your records, contact the issuer and ask them to review it. A corrected form is filed with the IRS too, so a fix on their end matters to your return. Do not quietly ignore a figure you believe is inflated. Document why it is off and keep that with your file.
When to bring in help
A single account with a handful of trades is usually manageable on your own. The work gets harder when you have several exchanges, transfers between wallets, staking or rewards income, DeFi activity, or years where the basis records are thin. Those are the cases where a preparer who does crypto regularly tends to save you more than the fee, both in a lower correct number and in a return that holds up if the IRS asks.
A 1099-K, or its successor the 1099-DA, is a starting point, not a verdict. The number on it is loud but incomplete. Fill in the missing half, your basis, report the real gain, and keep the records that prove it.