Does Koinly Report to the IRS? What Crypto Investors Need to Know (2026)

ByInnovateHub Finance

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Does Koinly Report to the IRS?

The short and direct answer is: No, Koinly does not automatically report your crypto transactions to the IRS.

Koinly is a crypto tax calculation and reporting platform. It helps you organize transaction history, calculate gains and income, and generate tax forms — but it does not independently transmit your information to the IRS.

However, crypto tax reporting in the United States has evolved significantly in recent years. To fully understand the answer, you need to understand who actually reports to the IRS, what forms are involved, and what your responsibilities are as an investor.

If you’re evaluating Koinly overall, you can start with our full Koinly review.

Disclaimer: This article is for informational purposes only and does not constitute tax advice. Tax regulations change frequently, and you should consult a qualified tax professional regarding your specific situation.

How Crypto Reporting Works in the United States

In the U.S., crypto tax reporting typically involves three parties:

  1. The investor (you)
  2. The exchange or broker
  3. The IRS

The IRS treats cryptocurrency as property for federal tax purposes, meaning capital gains rules generally apply when assets are sold, exchanged, or disposed of. Understanding this classification helps clarify why exchanges, brokers, and investors have distinct reporting roles.

Centralized exchanges such as Coinbase, Kraken, or Binance US may issue tax forms including:

  • Form 1099-MISC
  • Form 1099-B
  • Form 1099-DA (new reporting framework being phased in)

When these forms are issued:

  • One copy is sent to you
  • One copy is sent to the IRS

That reporting obligation belongs to the exchange or broker — not to Koinly.

What Koinly Actually Does

Koinly functions similarly to accounting software.

It:

  • Imports transaction history via read-only API keys
  • Imports public wallet addresses
  • Accepts CSV file uploads
  • Calculates capital gains and losses
  • Classifies income events
  • Generates IRS-ready reports (e.g., Form 8949, Schedule D summaries)

It does not:

  • File taxes automatically
  • Send reports to the IRS
  • Hold custody of your funds
  • Have withdrawal access

Koinly organizes your data — it does not report it.

Why People Think Koinly Might Report to the IRS

There are two common misunderstandings:

1️⃣ API Access Feels “Official”

When users connect exchange API keys, it can feel like granting powerful permissions.

In reality, Koinly requires:

  • Read-only access
  • No trading permissions
  • No withdrawal permissions

This means:

  • Koinly can view transactions
  • Koinly cannot move funds
  • Koinly cannot report externally

2️⃣ Confusion Between Exchanges and Software

If Coinbase sends a 1099 to the IRS, some assume Koinly must be doing something similar.

It is not.

Exchanges report.
Tax software calculates.

What About the New 1099-DA Rules?

Beginning in 2025–2026, U.S. crypto brokers will gradually implement Form 1099-DA reporting under updated IRS regulations.

Important distinction:

  • The broker or exchange issues 1099-DA
  • Koinly does not

Even under expanded broker reporting rules, Koinly remains a calculation platform. It does not independently transmit your portfolio data.

Under current regulations, reporting responsibility applies to brokers and certain intermediaries that facilitate transactions. Software platforms that calculate gains based on user-imported data are not classified as reporting brokers under these rules.

Real Example: How Reporting Actually Happens

Let’s say:

  • You trade on Coinbase and Kraken
  • You connect both to Koinly
  • Koinly calculates your gains

If Coinbase issues a 1099, the IRS receives that from Coinbase — not from Koinly.

You then:

  • Download Form 8949 from Koinly
  • File it with your tax return

The act of reporting happens through you, not through Koinly.

Can the IRS See My Koinly Account?

No.

The IRS does not have:

  • Direct access to Koinly accounts
  • Real-time API visibility
  • Automatic data feeds from Koinly

Your account is private software usage unless you submit generated reports yourself.

If security is your main concern rather than reporting, see our article on Is Koinly safe.

What Happens If You Don’t Report Crypto?

Even though Koinly does not report automatically, that does not eliminate reporting obligations.

Increased IRS enforcement includes:

  • Crypto question on Form 1040
  • Exchange-issued 1099 forms
  • Broker reporting expansion
  • Audit focus on high-volume traders

If exchanges issue forms and you fail to reconcile totals properly, discrepancies may trigger IRS notices.

Ironically, using Koinly can reduce risk by:

  • Reconciling multiple exchanges
  • Calculating correct cost basis
  • Identifying missing transactions
  • Reducing underreporting errors

For calculation reliability, see our breakdown of Is Koinly accurate.

It’s also important to understand that the IRS has expanded its crypto enforcement capabilities in recent years. Blockchain analytics tools, broker reporting requirements, and cross-platform data sharing make it increasingly difficult to ignore taxable activity. While Koinly does not report your data directly, exchanges and brokers may already be sharing certain information. Using structured tax software helps you reconcile what has been reported and ensures your filing aligns with available records.

How the IRS Detects Crypto Activity

The IRS does not rely solely on voluntary disclosure. Over the past several years, enforcement efforts have expanded significantly through blockchain analytics partnerships, broker reporting requirements, and exchange data-sharing agreements. So when asking “Does Koinly report to the IRS?”, the key is distinguishing between reporting brokers and tax preparation software.

Detection methods may include:

  • Exchange-issued 1099 forms
  • Broker reporting under Form 1099-DA
  • Blockchain analysis tools tracking wallet activity
  • Cross-referencing tax returns with exchange data

This does not mean every crypto user is audited, but it does mean that discrepancies between exchange-reported data and filed returns are more visible than in earlier years.

Using structured tax software does not increase your exposure — it helps ensure that what you report aligns with what exchanges and brokers may already be reporting.

What Are the Real Risks?

No system is risk-free. The realistic risks include:

  • Poorly configured API keys
  • Weak account passwords
  • Phishing attempts
  • Data breaches unrelated to tax filing

The key point:

Reporting risk comes from inaccurate filing — not from using tax software.

Koinly does not create reporting exposure. Incorrect or incomplete tax reporting does.

Pros and Cons of Koinly Not Reporting Automatically

Pros

  • Full user control over filing
  • No automatic government transmission
  • Greater privacy control
  • Flexible exports

Cons

  • Filing responsibility remains with you
  • Requires manual submission
  • No “auto-compliance” shortcut

For serious investors, control is typically preferable to automatic submission.

Is Koinly Safe for Large Portfolios?

Yes — the reporting mechanics do not change based on portfolio size.

For large portfolios:

  • Exchanges may report certain activity
  • Koinly still does not
  • User responsibility remains the same

High-net-worth investors should focus on:

  • Proper API configuration
  • Secure account hygiene
  • Professional tax review if needed

Does Koinly Report to the IRS Outside the U.S.?

No.

The same principle applies globally. Koinly:

  • Generates reports
  • Does not automatically transmit them
  • Leaves filing responsibility to the user

Local exchanges in countries like the UK, Canada, or Australia may have separate reporting requirements — but that is exchange-driven, not Koinly-driven.

Final Verdict: Does Koinly Report to the IRS?

No, Koinly does not automatically report your crypto transactions to the IRS.

It prepares the reports — you decide how and when to submit them.

Exchanges and brokers may report certain activity under U.S. regulations, but Koinly itself does not independently transmit your transaction data to tax authorities.

Understanding this distinction is important: compliance risk comes from inaccurate or incomplete reporting — not from using calculation software. Koinly helps organize information, but filing responsibility always remains with the taxpayer.

If you want to see how your transactions look before filing anything, you can start using Koinly for free, import your exchanges with read-only access, and review your calculated reports before deciding to upgrade.

FAQ

1. Does Koinly automatically file taxes for me?

No. Koinly prepares reports; it does not file them automatically.

2. Does connecting an API mean the IRS gets notified?

No. Read-only API access allows Koinly to view transactions only.

3. Can the IRS request data from Koinly?

The IRS may request information from exchanges under legal processes. Koinly itself does not proactively report user data.

4. What if my exchange already issued a 1099?

You should reconcile it with your complete transaction history to ensure accuracy.

5. Is using Koinly safer than not using tax software?

Using proper tax software generally reduces reporting errors and improves compliance clarity.

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