Welcome to this guide, where we are going to cover a very debated topic that generates a lot of doubts to the newest users, about KuCoin in US and IRS.
We are going to see if Kucoin really sends information to IRS or not, and what may be the reasons or problems that it may cause to us as users.
But first, we should mention that for this to happen, we will have to verify the account with the KYC. If you have not passed KYC or verified your account with your name and ID, this does not affect you. KuCoin cannot link your account to your person, as they do not have your information such as your ID card.
Do you report to the IRS?
The question that many people have is whether KuCoin informs the tax authorities of our movements or balances on the platform.
The answer is No, but with something to keep in mind.
KuCoin does not send a report of all known users to the tax authorities, as this would be a lot of information and by regulation they are not obliged to do so. Because they do not have a tax domicile in US.
As they do not have any tax headquarters in US, they do not have to send reports of all the users they have in US. Only the platforms that do have a tax domicile in US, usually Spanish platforms or some others such as Binance, are more likely to send a report to the tax authorities with the balance of users.
On the other hand, kucoin will provide information in case the tax authorities require it. And this is something to bear in mind. This type of platform with no tax headquarters in US but with KYC does not report directly to the tax authorities, but it can provide information if required.
This means that the tax authorities do not have a record of who has funds or not in KuCoin and their movements, but if they know that someone may have cryptocurrencies in it and is not paying tax on it, they can request information on that user, and kucoin will provide it.
So, if the tax authorities don’t know that you have cryptocurrencies in KuCoin, you shouldn’t have any problems. But if on the other hand you have made withdrawals from cryptocurrency platforms without declaring it and they are large amounts, it is possible that the tax authorities will detect it and may carry out an investigation.
In small amounts of a few thousand euros, it is very difficult for the tax authorities to detect these movements, especially if you withdraw them in a distributed way to your bank account. Bear in mind that the tax authorities are notified by the banks when the amounts are greater than 3,000$. So if you withdraw 3,000$ or more, it is possible that the bank will inform the tax authorities of the movement.
If you do not withdraw your cryptocurrencies to your bank account, as there is no record in the banking system, it is not possible for them to know the amount you have in cryptocurrencies. The only way would be if KuCoin reports directly to the tax authorities, but as we have already mentioned, it is the other way around. Where the tax authorities suspect or know that someone has cryptocurrencies in KuCoin, they subsequently request information from this platform to find out their movements and balance.
If you do not withdraw your cryptocurrencies to your bank account, there are alternatives to use those funds on gift card redemption platforms.
I hope this has helped you to understand how the tax authorities and KuCoin currently work. Remember that if you don’t have an account with binance, you can create one just below.