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The 1099-B form is what you need to submit to the IRS so that they can keep track of your capital gains or losses for the year. Robinhood provides you with a 1099-B tax form just like every other broker. This is not possible with any other exchange service since they don’t track every transaction on your wallet.
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You will, however, incur taxes on any capital gains you may have had.ĭifferences between Robinhood and other exchanges Cons: If you want to move your crypto assets to another platform, you’ll have to sell your crypto and repurchase your crypto.Since all your transactions remain within the platform, Robinhood can generate a 1099 form where the total of your capital gains from every trade is summarized. Pros: It makes your tax reporting significantly more accessible.And this has both its pro’s and con’s which you need to consider. It doesn’t go to your crypto wallet, as it does on other exchange services. When you decide to invest in crypto on Robinhood, your crypto stays on the Robinhood platform. This ease of use has made it easy for many people to dip their toes into investing in crypto. One of the main reasons why so many people have decided to use Robinhood, aside from the zero-fee trades, is that it gives you access to most investment assets. For example, if you received 1 BTC from mining, that is considered taxable income for you. If you used the ether you bought at $300 to buy something today, you would be taxed by the capital gains realized at the time of purchase.īonus: Though this isn’t relevant to Robinhood, receiving an award, airdrop, interest, staking income, mining income, or other income in the form of a digital asset causes a taxable event. Using crypto to purchase a good or service will also trigger a taxable event.For example, if you want to use some of your bitcoin to buy ether, it will generate a capital gain or loss depending on how the transaction went. When you exchange one cryptocurrency for another cryptocurrency.
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Depending on how long you’ve held the crypto, this event will be regarded as a long or short-term capital gain or loss, and will count towards your net capital gains for the year.
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Robinhood has quickly grown its userbase to over 13 million, and now the question is, what about taxes? In short, it could be a worthwhile investment, though not for the faint of heart.Īdding to the popularity of crypto is the rise of free-trading apps such as Robinhood that has made investing in all types of assets, including crypto, much more accessible for the everyday person. There’s a good reason for that.īecause, even though highly volatile, crypto outperforms most other assets available. Today, crypto has become a legitimate investment asset that is steadily finding its way into more and more portfolios. Long gone are the days when crypto was considered a fringe interest.