Does Robinhood Report Crypto to the IRS?
May 18, 2023

Does Robinhood Report Crypto to the IRS? Yes — But Not All of It! [Explanation]

Personal Taxes

Robinhood has made it easier than ever for everyday Americans to trade crypto — or at least to make or lose money based on the price movements of certain cryptocurrencies — but what does this mean for your tax situation?

Does Robinhood report crypto to the IRS?  I’ll give you the full explanation later in this article, but first, let me say something very important: Even if a particular trading platform does not report your crypto transactions to the IRS, it is still your legal duty to report these crypto transactions on your tax return.

Got that?  Good.  Now let’s dig into whether Robinhood reports crypto to the IRS.

Related: Are Free Stocks Taxable?

Does Robinhood Report Crypto to the IRS?

Yes, Robinhood reports crypto to the IRS on Form 1099-B.  However, Robinhood only reports your gross proceeds from each crypto transaction to the IRS on this form.  You are responsible for reporting to the IRS what you paid for your crypto — this is known as your cost basis — on the Form 8949 and Schedule D that is attached to your Form 1040 tax return.

Note that Robinhood only reports the sale of crypto to the IRS; if you merely purchased crypto in your Robinhood account using fiat money but didn’t sell any of it during the year, then:

  • There is no taxable event with respect to your Robinhood crypto.
  • Robinhood will not report your crypto to the IRS since all you did was purchase crypto with fiat money.
  • You can answer, “No,” to the “Digital Assets” question on your Form 1040 if this was your only involvement with crypto during the year.

Will the IRS Catch You If You Don’t Report Your Robinhood Crypto?

Yes, the IRS will catch you if you don’t report your Robinhood crypto.

If you don’t report your Robinhood crypto transactions to the IRS on your tax return, the IRS will likely use the information that Robinhood gave you about your crypto on Form 1099-B to calculate what your tax liability for your Robinhood crypto transactions and send you a bill for this amount.

As a matter of fact, just yesterday someone commented on one of my YouTube videos saying that the IRS sent them a proposed tax bill because they didn’t report their Robinhood crypto trading activities on their tax return.

YouTube Question Regarding Robinhood Crypto Tax Bill From IRS

Naturally, this individual learned the hard way that yes, Robinhood does report crypto to the IRS and if they fail to report their Robinhood crypto transactions on Form 8949 and Schedule D, the IRS will find out, perform their own calculations, and send them a bill.

What If You Don’t Report Your Robinhood Crypto?

So what would I, as a CPA, say to someone in this situation who is looking at a large tax bill from the IRS for their Robinhood crypto trading activities?

First, I would tell them not to freak out because the IRS is very likely overcalculating your tax liability here because they likely don’t know your basis in your crypto.  Why?  Because like I said previously, your crypto basis is not reported to the IRS on the Form 1099-B that Robinhood gives it.  It’s likely that only your gross proceeds are reported — at least that’s how it’s been on every Robinhood Crypto Form 1099-B I’ve looked at.

However, your Robinhood Crypto gain/loss statement they sent you at the end of the year — which is different from your Form 1099-B — should show you your basis in your crypto.

So if this is you, while I obviously haven’t seen your documents or the IRS notice you’ve received, I would say that, in general, the best course of action in these situations is to respond to the IRS and attach your Robinhood Crypto gain/loss statement showing your true gain or loss for your Robinhood crypto transactions during the year.

And if you were a client, I’d probably submit my own calculation of the additional tax due (which is probably a lot less than what the IRS is proposing) rather than trusting the IRS to take the paperwork you give them and figure it out correctly.


Logan Allec, CPA

Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.

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