Over the years especially since the pandemic, interest in cryptocurrencies amongst the general populace has surged with many crypto exchanges and wallets seeing a significant uptick in registered users and daily trading volume.
Kucoin is a cryptocurrency exchange that has witnessed massive growth in users since its launch back in 2017. The exchange allows users to buy, sell and trade cryptocurrencies and other digital assets.
As with any financial institution in the United States and many other countries of the world, traders are required to adhere to the tax rules and regulations in their various countries.
If you’re a user of the Kucoin exchange concerned about whether KuCoin is required to report user transactions to the Internal Revenue Service (IRS), then you’re not alone as many other Kucoin users have also inquired about this information on various online forums including Reddit.
With Kucoin being one of the most popular crypto exchanges in the market right now, it doesn’t come as a surprise that many Kucoin customers are questioning if the exchange actually reports their transactions to the IRS or other tax agencies.
In this article, we will explore the Kucoin exchange and its stand in tax reporting and ultimately find out if Kucoin reports to the IRS. We will also be sharing some steps that traders can take to ensure they are meeting their tax obligations when it comes to crypto transactions on Kucoin.
Does Kucoin Report User Transactions To The IRS?
Kucoin is a cryptocurrency exchange that is registered in Seychelles. Since it is not a registered financial institution in the United States, Kucoin is not obligated to report user transactions to the IRS for tax purposes.
However, the fact that Kucoin is not legally required to report user transactions to the US tax agency doesn’t mean that its users are exempt from reporting their crypto transactions and accurately filing their crypto taxes with the Internal Revenue Service (IRS) or the tax agencies in their respective countries of residence.
Kucoin is not licensed to operate in the United States and many users of the exchange who choose to bypass this by accessing the exchange via a VPN do so at their own risk and are fully responsible for filing their crypto taxes appropriately with the US tax agency.
Even though Kucoin is not legally obligated to report to any US agency including the IRS and the SEC, the exchange has made it clear in its user agreement policies that it will consider the request of any regulatory body if it requests cryptocurrency transactions or other personal information of its users.
Do You Have To Pay Taxes If You Use Kucoin?
Yes, you definitely have to pay your taxes if you use the Kucoin exchange to buy, sell, and trade cryptocurrencies.
Tax rules and regulations vary across countries when it comes to virtual currencies so we recommend making appropriate research on how cryptocurrency transactions and other crypto-related are taxed in your country and following accordingly to avoid issues with tax authorities.
For United States citizens, the tax agency responsible for collecting taxes and administering the tax code – the Internal Revenue Service (IRS) has made it clear that virtual currencies (including cryptocurrencies) are considered properties and are taxed accordingly.
That said, not all cryptocurrency transactions are considered taxable by the IRS. Some taxable cryptocurrency events according to the IRS include trading cryptocurrencies, using your crypto holdings to purchase goods and services, receiving crypto from a fork, mining, staking rewards, referrals, and more.
Other crypto events which are not considered taxable by the tax agency include donating crypto to non-profits or registered charity organizations, buying crypto with fiat (ie from your bank account or via credit card), gifting crypto, and transferring tokens to another wallet you own amongst others.
How To File Your Kucoin Taxes Explained
Since Kucoin does not automatically generate a tax report for you or report your crypto transactions to the IRS or the tax agency in your country, you will need to utilize any of the crypto tax software available to file your Kucoin taxes appropriately.
After creating an account on Koinly, you can either link your Kucoin account to the platform via the Kucoin API or upload a CSV containing your Kucoin transaction history to generate your crypto tax reports.
We recommend generating an API key on your Kucoin account and linking it to Koinly since it s easier and less problematic but you can also choose to import your Kucoin transaction history manually into Koinly via a CSV file.
After connecting your Kucoin account to Koinly via API or importing your transaction history to the platform, Koinly will help categorize all your KuCoin transactions into gains, losses, and income then calculate your KuCoin capital gain tax and KuCoin income tax.
After that, you can download your correct tax report from the platform and submit to the IRS or the appropriate tax agency in your country.
Kucoin, the 4th most popular crypto exchange in the world just after Binance, Coinbase, and Kraken, is a top choice for many US crypto investors even though the exchange is currently not licensed to operate in the United States.
Like many exchanges which are not registered as financial institutions in the United States like Binance International, Kucoin is currently not legally obligated to report its user transactions to the IRS for tax purposes.
That said, Kucoin has also made it clear in its User Agreement and policies that it will cooperate with any US agency that requests the transaction history of any of its users for either tax or investigative purposes.
As with any tax-related matters, it is important for users of the Kucoin exchange and other cryptocurrency exchanges to keep track of their transactions and consult with tax professionals to ensure that they are in compliance with reporting requirements in their various countries.
This may involve calculating and reporting capital gains or losses from cryptocurrency trades, as well as disclosing any income from cryptocurrency mining or staking activities.
Since Kucoin doesn’t automatically generate tax reports, we recommend using a crypto tax software like Koinly to generate your Kucoin tax reports. After generating your tax reports you can then file them with the tax agency in your country directly or through your tax consultant.