Crypto / Koinly / 1099-MISC

Forum|Forum|4 years ago
April 10, 2022
1 reply
0 views

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.

Not A Product Question

KrisD15

Yes, the IRS will be looking for that 1099-MISC

I suggest you enter the 1099-MISC then enter a subtraction.

Describe the subtraction as "1099-MISC Income reported twice" or something to that effect so that the IRS trace it.

Enter the 1099-MISC and do not link it as self-employment

Now enter a subtraction

Go back to the Wages & Income section

Scroll down to the VERY LAST option "Less Common Income" and click Show more

On this new drop-down list scroll down to the VERY LAST option "Miscellaneous Income" and click Start

Now scroll down to the VERY LAST option "Other reportable income" and click Start

Select YES on the "Any Other Taxable Income?" screen

Type "Income reported twice" and the same amount you entered before but as a NEGATIVE (put - in front of the number)

This NEGATIVE number should show on your 1040 line 8 and cancel the double reporting of that income.
Keep everything with your tax file.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

farleylai

First, what is the way not to link it as self-employment in TurboTax?

By answering "No, it didn't involve an intent to earn money" seems to work?
However, if 1099-MISC is received every year as it's like 1099-INT from banks, selecting "Got it" in more than one year seems to cause TurboTax to link as the self-employment as well. What is the right practice for this? Is it OK to just select this tax year?

Next, I would like to follow up as Crypto exchanges such as BlockFi also sends 1099-B. Crypto tax services such as Koinly are essential for supporting combining transactions involving transfers between exchanges to calculate the right gains and losses. However, that also implies all those 1099-B buys/sells are included. Is there a way to subtract the 1099-B amount as 1099-MISC to avoid double reporting? Any suggestions?

DianeW777

It does not have to be reported as business income if you do not consider yourself as a business activity. If the crypto you earned from the 1099-MISC is from one of the activities mentioned below then it should be entered as 'Other Income' and not through the 1099-MISC entry.

Form 1099-MISC is often used to report income you've earned from participating in crypto activities like staking, earning rewards or even as a promotional incentive from a broker or crypto exchange.

Down the left side of the screen, click Federal.
Down the left side of the screen, click Wages & Income.
Click Show more to the right of Less Common Income.
To the right of Miscellaneous Income, 1099-A, 1099-C, click the Start / Revisit button.
To the right of Other reportable income, click the Start / Revisit button.
At the screen Other Taxable Income, enter a description such as “Cryptocurrency rewards” and an amount.

Reporting Form 1099-B is different and is considered an exchange of an investment asset or property. It would not represent a double taxation of the same funds. Report it using your tax cost basis (which may be the taxable income from the rewards if this is the same crypto that you sold). Include both your purchase price and taxable rewards for any crypto you traded/sold.

Use the Search (upper right) > type 1099b > Use the Jump to... link to begin > Scroll to the bottom of the page and select 'Add Investment'
Continue to the screen that asks how you want to enter and select 'Enter a different way' (if you don't want to import)
Select the appropriate box based on what sale you want to enter (1099-B, Other, etc)
Follow the screens to complete your additional sales

@farleylai

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"