Gemini Taxes Guide

If you’re trading on Gemini, taxes are on your way. Gemini is a popular crypto exchange based in the US and one of the biggest exchanges worldwide. Gemini became a household name right from the get-go, being founded by the famous Winklevoss brothers, who were involved in creating Facebook.

The crypto company offers several products for customers:

• Gemini exchange for trading with 70+ crypto pairs
• Gemini earn for gaining crypto interest
• Gemini card for payments with crypto
• Gemini pay for buying products with crypto
• Gemini Wallet to store assets and more!

Using Gemini products will lead to different taxable events due to their nature. Today, we cover all the tax implications of trading on Gemini, earning interest, or spending your crypto for products/services.

Do you have to pay taxes when trading crypto on Gemini?

Yes. If you trade crypto on Gemini, you’ll enter a capital gains tax setting. On Gemini, you can trade 70+ pairs, including crypto-to-crypto. Selling crypto for FIAT (e.g., USD) or another cryptocurrency, including stablecoins, is a taxable event in the US, subject to capital gains taxes.

Let’s see how that plays out.

In December 2020, you bought 1 bitcoin for $30K and sold it for $50K in January 2022. Your cost basis is $30K, and your sales proceeds are $50K. Your capital gains are the difference between your sales proceeds and cost basis. In this case, your capital gain is $20K.

Since you sold after holding bitcoin for longer than 12 months, you’ll qualify for a long-term capital gains tax rate, ranging from 0% to 20%. If you had sold before holding for 12 months, you would be subject to a short-term capital tax rate, ranging from 10% to 37%.

Learn more about the taxes involved when trading cryptocurrencies.

Do you pay taxes when trading crypto for Gemini Dollar?

Yes. Trading crypto for a stablecoin like Gemini Dollar (GUSD) is a taxable event, subject to capital gains taxes.

Moreover, trading a stablecoin for another stablecoin is also a taxable event because it is still a crypto-to-crypto trade. In those cases, your capital gain/loss will be marginally small since the cost basis and sales proceeds are almost the same due to the 1:1 ratio of stablecoins. However, since it is still a crypto-to-crypto trade, you must report that marginally small gain/loss in your taxes, even if it is zero.

Learn all the tax implications of trading stablecoins.

Gemini earn taxes

In the US, each time you gain crypto interest from platforms like Gemini Earn, you’ll have to determine their Fair Market Value (in USD) at the time you receive them and recognize it as ordinary income.

Let’s imagine that you locked 1 bitcoin on Gemini Earn in December 2020, when 1 bitcoin was worth $30K. Let’s also assume it gains 1% yearly on Gemini Earn. On December 2021, you received 0.01 BTC (0.01*1 bitcoin). However, in December 2021, 1 bitcoin is worth $50K. You would need to determine the correct Fair Market Value (in USD) for the 0.01 BTC at that time. In this case, you need to recognize $500 (0.01 BTC * $50K) as ordinary income. Each time you receive a new batch of crypto interest, you need to determine the FMV of each batch and report it as ordinary income.

Learn more about the tax implications of receiving crypto interest in the US.

Do you have to pay taxes when purchasing products with Gemini Crypto Card?

Purchasing products or services with crypto leads to a capital gains tax setting because you’re essentially disposing of (e.g., selling) crypto to buy a product. This may be strange for novel crypto traders, but that doesn’t eliminate the need to comply with the tax code. Whether you buy products with crypto through an app or a card like Gemini Crypto Card, the tax treatment is the same as if you sold crypto for FIAT, then immediately use the FIAT to make a purchase.

The calculation to determine the gain/loss will be based on the difference between the FMV of the crypto at the time of the purchase and your cost basis in the crypto. Depending on your holding period in the crypto, you may end up with a long-term (> 12 months) or a short-term (=< 12 months) capital gain/loss.

Learn more about the tax implications of purchasing products with crypto.

Does Gemini report to the IRS?

US exchanges like Gemini have to comply with US regulatory requirements. Starting on January 1, 2023, given the newly passed law related to the Infrastructure Bill in the US, crypto brokers (e.g., exchanges) will have to report trades involving digital assets for the calendar year to the IRS on Forms 1099-B or another similar tax form.

Until now, other reporting mechanisms have been used by crypto exchanges to reveal customer data in response to the IRS “John Doe Summons” issued to several brokers in the US. Such tax reporting led to many tax notices being issued to crypto investors who did not report or did not correctly report their crypto taxes.

How to report Gemini taxes?

All the taxable events (e.g., trading crypto, purchasing products with crypto) on Gemini that lead to a capital gains tax scenario will have to be reported on Form 8949 and Schedule D of your Form 1040. You need to keep track of your trades and determine the gain/loss on each one for the tax year and report it.

If you receive crypto interest from Gemini Earn, you have to determine the Fair Market Value (in USD) at the time you received them and declare them in your income tax return as ordinary income. Learn all about reporting your crypto taxes.

The first step to becoming tax compliant is to keep track of your crypto trades, spending, and crypto income. You can use a crypto portfolio tracker and taxes software like CoinTracking to import your trades from Gemini using a CSV or API importer. Then, CoinTracking will calculate your gains automatically based on the accounting method you choose while enabling you to generate tax reports.

Learn how to import Gemini trades with an API into CoinTracking:

The best Gemini tax calculator: CoinTracking

The best crypto tax software to import and track your Gemini trades is CoinTracking.

You can import your trades using CSV or API, track your gains/losses, and generate tax reports according to your preferred accounting method.

Beyond Gemini, CoinTracking is your full crypto tax solution for:

• Importing (API & CSV) your trades from 110+ exchanges.
• DeFi and NFT support with our ETH+DEX importer.
• Importing your Binance Chain, Binance Smart Chain, and MATIC transactions.
• 25+ advanced reports, including which coins offer you a tax-free rate.
• Automatic capital Gains, according to 12 accounting methods (e.g., FIFO, LIFO, HMRC, ACB), accepted worldwide.
• Generating complete Tax Reports in your country.

Moreover, CoinTracking can easily classify all your earnings from yield farming, liquidity pools, crypto staking, and much more.

Do you have to pay taxes on your crypto transactions on Gemini?

Yes. If you use Gemini to trade or earn crypto, you’ll have the following taxable events:

• Trading crypto for other digital assets: Capital gains taxes
• Trading crypto for FIAT: Capital gains taxes
• Trading crypto for stablecoins: Capital gains taxes
• Earning crypto interest on Gemini Earn: Ordinary income taxes
• Purchasing products/services with Gemini Crypto Card: Capital gains taxes
• Purchasing products/services with Gemini Pay: Capital gains taxes

Gemini taxes with no errors: CoinTracking Full Service in the US.

CoinTracking also offers a Full Service for US traders. A crypto reconciliation tax expert from Polygon Advisory Group, a leading US crypto tax firm, will review your CoinTracking account, help fix any errors, and ensure you submit your crypto tax reports error-free.

This post is part of the Crypto Taxes AMA series. Follow our weekly AMAs on Twitter where our expert CPA, Sharon Yip answers your crypto tax questions. You can download 30+ AMA crypto tax reports for free.

Disclaimer: All the information provided above is for informational purposes only and should not be considered as professional investment, legal, or tax advice. You should conduct your own research or consult with a professional financial advisor when investing.