Is Robinhood Crypto considered a digital asset for tax reporting on Form 1040?
Hey tax folks, I'm filling out my 2023 tax return and got confused by this question on the 1040 form: "At any time during 2023, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?" I did some crypto trading on Robinhood last year, and I got a 1099-B that shows Short Term B (basis not reported to the IRS). So I'm assuming the answer is "Yes" since crypto is a digital asset, right? Just want to make sure I'm not messing this up. Does anyone know for sure if Robinhood Crypto counts as a digital asset for this question?
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Isabella Santos
Yes, cryptocurrency transactions through Robinhood absolutely count as digital assets for tax reporting purposes. The IRS considers virtual currencies like Bitcoin, Ethereum, etc. to be digital assets regardless of which platform you use to trade them. Since you received a 1099-B showing crypto transactions (even with basis not reported to the IRS), you should answer "Yes" to that digital asset question on your 1040. This doesn't necessarily mean you'll owe taxes—that depends on whether you had gains or losses—but you need to disclose the activity. Make sure you report all the transactions from your 1099-B on Schedule D and Form 8949. The "basis not reported to the IRS" notation means you'll need to calculate and enter the cost basis yourself rather than having it pre-filled.
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StarStrider
•Thanks for the info! I'm a bit confused though - if Robinhood is supposed to be tracking all my purchases and sales, why wouldn't they report the basis to the IRS? Do I need to go back and try to figure out what I paid for everything?
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Isabella Santos
•Robinhood might track your transactions, but they're not always required to report cost basis to the IRS for crypto. This is because cryptocurrency regulations are still evolving, and the reporting requirements aren't as established as they are for traditional securities. Yes, you will need to go back and determine what you paid for each crypto asset you sold. You can usually download your transaction history from Robinhood or review your monthly statements. Make sure you're accounting for all purchases, including any partial purchases made over time. Keep in mind that specific tax lot identification or FIFO (First In, First Out) methods can affect your gain/loss calculations.
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Ravi Gupta
After struggling with the exact same question last year, I found this amazing tool called taxr.ai (https://taxr.ai) that saved me tons of time with my crypto tax reporting. I had traded on multiple platforms including Robinhood and was completely lost trying to figure out what counted as a digital asset. The tool scanned my Robinhood 1099-B and other crypto documents, then explained exactly how to report everything correctly. It even helped me identify which transactions needed to be reported on Form 8949 and which required a "Yes" answer to the digital asset question. Their explanations were super clear and matched what my friend (who's a tax professional) told me.
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Freya Pedersen
•How does it work with multiple platforms? I've got some crypto on Robinhood but also used Coinbase and did some DeFi stuff that didn't generate any tax forms. Would it help with all that or just the 1099 forms?
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Omar Hassan
•Sounds useful but I'm always suspicious of these tax tools. How accurate is it really? Last thing I need is to get audited because some AI tool gave me wrong advice about crypto reporting.
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Ravi Gupta
•It works with all major crypto platforms including Robinhood, Coinbase, Binance, and others. You can upload documents from multiple sources, and it consolidates everything. For DeFi transactions that don't have formal tax forms, you can upload CSV files of your transaction history and it will analyze those too. It's especially helpful for identifying taxable events that might not be obvious. Regarding accuracy, I was skeptical too initially. What convinced me was that they explain the tax rules they're applying to each transaction with references to specific IRS guidance. I compared their recommendations to what my accountant friend suggested, and they matched perfectly. They're focused specifically on crypto tax compliance rather than being a general tax tool, which I think makes their guidance more reliable for these specific digital asset questions.
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Omar Hassan
Just wanted to update after trying taxr.ai that someone recommended here. It actually worked really well with my Robinhood crypto situation. I uploaded my 1099-B and it immediately flagged that yes, these are digital assets that need to be reported. The tool explained that all crypto trading counts as digital asset activity regardless of platform, and showed me exactly where to report each transaction on Form 8949. It even helped me calculate my basis for some trades where Robinhood hadn't provided it. Definitely answering "Yes" to that digital asset question now and feeling much more confident about my reporting. Saved me from calling the IRS and waiting on hold forever.
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Chloe Anderson
If you need to call the IRS about this digital asset question or anything related to your crypto reporting, don't waste hours on hold like I did. There's this service called Claimyr (https://claimyr.com) that will actually wait on hold with the IRS for you and then call you when an agent is on the line. I was super skeptical but there's a video showing how it works here: https://youtu.be/_kiP6q8DX5c I had some complicated questions about reporting basis for my Robinhood crypto that wasn't on the 1099-B, and I needed to talk to an actual IRS agent. Used Claimyr and got connected in about 45 minutes when the estimated hold time was over 2 hours. The IRS agent confirmed that yes, all crypto trading counts as digital asset activity and requires answering "Yes" to that question.
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Diego Vargas
•Wait how does this actually work? They just call the IRS and then somehow transfer the call to you when someone picks up? That sounds too good to be true.
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CosmicCruiser
•Yeah right. I highly doubt this works as advertised. The IRS phone system is a nightmare specifically designed to prevent people from getting through. If this actually worked, everyone would be using it and the IRS would shut it down immediately.
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Chloe Anderson
•They have a system that dials in and waits on hold for you. When an agent picks up, they quickly connect the call to your phone. You just answer when they call you back. It's not like they're transferring an existing call - they're just doing the waiting part for you, then connecting you directly with the IRS agent when one becomes available. I was definitely skeptical too. I only tried it because I had already spent two hours on hold myself before getting disconnected. The way it works is totally legitimate - they're not bypassing any systems or doing anything the IRS would have an issue with. They're just waiting on hold so you don't have to. When the IRS agent picked up, they were completely unaware that I hadn't been the one physically holding all that time.
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CosmicCruiser
I need to eat my words about Claimyr. After posting my skeptical comment, I decided to try it anyway since I was desperate to ask about my Robinhood crypto situation. Unbelievably, it actually worked! Got a call back in about 30 minutes and spoke directly to an IRS rep who confirmed that yes, all crypto trading counts as digital asset activity. The agent explained that answering "Yes" to the digital asset question is required if you've conducted any crypto transactions in 2023, regardless of platform. They also clarified that I need to report each transaction on Form 8949 with my calculated basis since Robinhood didn't report it to the IRS. Honestly kinda shocked that something actually worked as advertised when dealing with tax stuff.
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Anastasia Fedorov
Just to add to what others have said - I'm a tax preparer and I've had dozens of clients with Robinhood crypto transactions this year. The answer is definitely "Yes" to the digital asset question. One thing to watch for: Robinhood's 1099-B might not include your complete cost basis data for crypto. Double-check your actual purchase prices against what's on the form. If there are discrepancies, you'll need to use your actual basis (which you can defend with transaction records) rather than what's on the form. Also, make sure you're properly identifying which crypto transactions fall into which tax lots if you made multiple purchases over time. This can significantly impact your tax liability.
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Malik Davis
•Thanks for the advice! How exactly do I figure out which purchases go with which sales if I bought Bitcoin multiple times throughout the year and then sold some? Does Robinhood track that specifically?
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Anastasia Fedorov
•By default, Robinhood typically uses the FIFO (First-In, First-Out) method for crypto, meaning your oldest purchases are considered sold first. You can usually see the detailed transaction history in your Robinhood account that shows which specific purchase lots were used for each sale. If you want to specify which lots you're selling (specific identification method), you generally need to have selected this at the time of sale within the Robinhood platform. If you didn't specifically choose tax lots during the year, you'll likely need to stick with FIFO for consistency. Download your complete transaction history from Robinhood to see all purchases and sales with dates and amounts - this will help you match everything up correctly when reporting.
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Sean Doyle
Anybody know if this question on the 1040 about digital assets is new? I swear I don't remember seeing this on my tax forms before last year. Is the IRS just trying to crack down on crypto now?
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Zara Rashid
•It's been around for a few years but they keep changing the wording. It used to be called "virtual currency" instead of "digital assets" and was on Schedule 1. Now they've moved it to the main 1040 form and broadened the language to include more types of digital assets, not just cryptocurrency. Definitely part of the IRS trying to increase compliance with crypto reporting.
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Omar Zaki
I had the exact same confusion with my Robinhood crypto trades! After going through this myself, I can confirm that yes, you absolutely need to answer "Yes" to that digital asset question. The IRS doesn't care which platform you used - crypto is crypto. One tip that really helped me: make sure you download your full transaction history from Robinhood, not just rely on the 1099-B. I found some small transactions that weren't clearly reflected on the form but still needed to be reported. Also, if you did any transfers between different cryptocurrencies (like Bitcoin to Ethereum), those count as taxable events too, even if you didn't convert back to cash. The "basis not reported to IRS" thing is annoying but manageable if you keep good records. I just went through my transaction history month by month and matched up my purchases with sales. Takes some time but beats getting a letter from the IRS later!
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