Coinbase is required by U.S. law to withhold a portion of certain payments and remit them to the IRS when specific tax conditions apply to your account. When withholding applies, the withheld amount appears as "Tax withholding" for backup withholding or "NRA withholding" for non-resident alien withholding on your transaction history.
Backup withholding
Backup withholding is a federal tax requirement. Coinbase withholds 24% of certain reportable payments when a U.S. customer, or a customer presumed to be a U.S. person, has not provided valid tax documentation, or has elected backup withholding on their Form W-9. Certain customers may also be subject to B-Notice or C-Notice backup withholding upon notification from Coinbase.
Backup withholding may apply to your account if:
• You declared U.S. tax residency through Coinbase’s tax self-certification and have not verified your Form W-9 with Coinbase.
• Coinbase has notified you that your account is subject to an active IRS B-Notice or C-Notice that has not been remediated.
• You checked the backup withholding box on your Form W-9 (only applies to payments of interest and dividends).
What backup withholding covers
Backup withholding applies to reportable income including:
• Gross proceeds from crypto sales and other disposals (Form 1099-DA reportable).
• Staking rewards, USDC Rewards, promo bonuses/rewards and any other reportable miscellaneous income payment reported on Form 1099-MISC.
• Gross proceeds from sales of non-crypto assets like equities and certain derivatives reported on Form 1099-B.
Transaction restrictions
Certain transaction types cannot be processed with backup withholding applied. If your account is subject to backup withholding, you may experience a blocked transaction. See the Stop backup withholding section for additional details.
State backup withholding
In addition to the 24% federal rate, certain states require additional withholding on top of the federal rate:
• California: 7%
• Maine: 5%
• Vermont: 7.56%
• South Carolina: 6%
Stop backup withholding with respect to a B-Notice
To stop backup withholding on future transactions, verify your Form W-9 on a first B-notice. If Coinbase has received a second B-Notice within three years regarding your account, your Form W-9 is not sufficient to resolve a second B-Notice. For more information, refer to the IRS B-Notice article for additional documents required to stop backup withholding.
Non-resident alien (NRA) withholding
Non-resident alien (NRA) withholding is a federal tax requirement under Chapter 3 of the Internal Revenue Code. Coinbase withholds a portion of certain U.S.-source income paid to non-U.S. customers.
NRA withholding may apply to your Coinbase account if you’re a non-U.S. resident, documented with a valid Form W-8, or presumed a non-U.S. resident under IRS rules, who receives U.S.-source income through Coinbase.
What NRA withholding covers
NRA withholding applies to U.S.-sourced Fixed, Determinable, Annual, or Periodic (FDAP) income, which is a category of income that generally includes rewards, interest, dividends, and similar income payments.
Withholding rates
The default NRA withholding rate is 30%. If you have submitted a valid Form W-8 and claimed benefits under an applicable U.S. income tax treaty, a reduced rate may apply. Treaty rates vary by country and income type.
To submit your Form W-8, go to Coinbase Taxes.
What appears on your statement
When withholding applies to a transaction, your transaction history includes a separate line item labeled “Tax Withholding" for backup withholding (accounts for federal and any applicable state backup withholding) and "NRA Withholding" for NRA. The withheld amount is shown in U.S. dollars (USD). For transactions involving crypto or digital assets, the amount is calculated using the fair market value of the asset at the time of the transaction and rounded to the nearest cent.