How To Do Your Gemini Taxes - Building Your Crypto Tax Forms

Gemini has grown to be one of the largest cryptocurrency exchanges that is based in the U.S. Many traders use Gemini because it operates and complies within the strict regulatory environment present in the United States. However, when it comes to doing your Gemini taxes and building out your required Gemini tax forms, many challenges arise. 

This article dives into the issue and explains the easiest way to build out your required Gemini tax forms.

A Quick Rundown of How the IRS Treats Cryptocurrency for Tax Purposes in the US

The IRS treats cryptocurrencies as property for tax purposes. Just like other forms of property—stocks, bonds, real estate—you incur a tax reporting liability when you sell or trade cryptocurrency for more or less than you acquired it for. 

In this sense, cryptocurrency trading looks similar to trading stocks for tax purposes.

For example, if you purchased 0.1 Bitcoin for $1000 in April of 2018 and then sold it two months later for $2,000, you have a $1,000 capital gain. You report this gain on your tax return, and depending on what tax bracket you fall under, you will pay a certain percentage of tax on the gain. Rates fluctuate based on your tax bracket as well as depending on if it was a short term vs. a long term gain.  

On the flip side, if you sold your cryptocurrency for less than you acquired it for, you can write off that capital loss to save money on your crypto taxes

Gemini Taxes - Breaking Down the Problem

Gemini can’t provide users with necessary tax reports commonly received in the world of trading stocks for a number of reasons.

The first problem is that many trades on Gemini are quoted in cryptocurrency. Because you need to be calculating the fair market value in your local FIAT currency at the time of your trades, this becomes very problematic, and Gemini does not track original cost basis/ fair market value data across trades.

Second, because you are able to send crypto into and out of the Gemini network, Gemini has no way of knowing at what cost basis you acquired that crypto for. Cost basis is essential data you need in the calculation of your crypto taxes.

You can read our complete guide for a deeper understanding of how bitcoin taxes work

I Got A 1099-K from Gemini - Does this Work For Filing My Crypto Taxes?

Unfortunately, a 1099-K is not a helpful document for tax reporting purposes. This document solely reports how much you transacted on a third party network like Gemini, and it does not contain any of the necessary information like USD cost basis or fair market value for your cryptocurrency transactions. Gemini is required to send you a 1099-K if you met two thresholds:

  1. Your Digital Asset-for-USD sales on the exchange exceed 200 transactions during the calendar year
  2. Your total sales proceeds from all sales of Digital Asset-for-USD exceed $20,000 during the calendar year.

As discussed above, to properly report cryptocurrency on your taxes, you need to report cost basis, fair market value, and gain/loss for each sell, trade, or other taxable event that you incur during the calendar year. The proper form that you need to report this if IRS Form 8949, not 1099-K.

Exchanges like Gemini actually do not have the ability to give users accurate tax forms. We break down this problem and why it exists in our article: The Cryptocurrency Tax Problem.

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So if Gemini Can’t Give Me My Necessary Tax Forms, How Do I Get Them?

To properly build out your necessary crypto tax forms, you need to pull together all of your cryptocurrency data that makes up your buys, sells, trades, air drops, forks, mined coins, exchanges, and swaps across all exchanges that you use.

You can do this by hand by exporting all of your trade history files from your exchanges and doing the capital gains and losses transaction for each trade. Each tax event should be recorded on form 8949 and your net gain should be transferred onto your 1040 schedule D. We walk through the manual reporting process in our article here: how to report cryptocurrency on taxes.

Gemini tax reporting

Crypto Tax Software

Alternatively, you can use crypto tax software like CryptoTrader.Tax to automate the entire tax reporting process. 

When using crypto tax software, you simply import all of your trading and transaction history from all of your exchanges into the platform. The software will automatically sort and cleanse this data and produce your required tax forms with the click of a button. You can watch the short video demo below to see how you can import your Gemini transactions.

You can give these generated tax reports to your tax professional, file them yourself, or upload them into your favorite tax filing software like TurboTax for cryptocurrency or TaxAct using the CryptoTrader.Tax partnerships.