Coinbase Users Can Now Receive Tax Refunds in Crypto Through TurboTax Partnership

Cryptocurrency exchange Coinbase (COIN) is giving users the option of receiving their tax refunds in crypto through TurboTax, the exchange said in a blog post Thursday.

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  • TurboTax’s website shows how users can get their refunds deposited directly into their Coinbase accounts. According to Coinbase’s blog post, customers can choose to get refunds deposited into one of over 100 cryptocurrencies, from stablecoins to yield-bearing assets.
  • Both federal and state tax refunds can be converted automatically into cryptocurrency, according to the New York Times, which was the first to report on the new feature.
  • Coinbase users could already get a discount on TurboTax products that support cryptocurrency, as well as use TurboTax’s CoinTracker to organize and file their taxes on crypto transactions for free or at a reduced rate for a large number of transactions.
  • Coinbase is trying to make it easier for customers to integrate their finances with its crypto trading platform. In September it announced it was allowing its U.S. customers to deposit all or part of their paychecks in crypto or dollars without a fee.
  • Recently, tax software firm TaxBit launched the TaxBit Network, a supported network of 20 crypto companies – including Coinbase, FTX.USBinance.US, Gemini and SuperRare – that will allow clients of supported institutions to access crypto tax forms for 2021 at no charge.

The software company has teamed up with Coinbase to allow users the option to convert their state and federal tax refunds into cryptocurrency.

Coinbase is trying to establish itself as a mainstream gateway to the world of cryptocurrency, a place to routinely deposit paychecks, expense reimbursements and tax refunds.

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On Thursday, the company started a direct deposit program with the software company TurboTax to send state and federal tax refunds to Coinbase accounts, with the option to automatically convert dollars into cryptocurrency, the DealBook newsletter reports.

“We’ve seen a rise in alternative investments, in a new class of investors beyond just high-income earners,” said Randy Hellman of TurboTax’s investor segment.

Coinbase sees itself as an “on-ramp” to the crypto economy. It wants to make things easy for people by offering direct deposits of all kinds, said the company’s head of product, Prakash Hariramani.

Coinbase just finished the rollout of a paycheck program in the United States, with Mayor Eric Adams of New York naming the company in a statement on converting his first mayoral income from dollars to crypto. Coinbase also lets people direct corporate expense reimbursements to their crypto accounts.

But holding a digital currency like, say, Dogecoin isn’t the same as having a dollar. Given crypto’s high volatility, even enthusiastic early adopters of these sorts of services are proceeding with caution.

“The education piece is really critical,” said Sally Shin, who leads strategy at the music distributor United Masters, which is working through the initial phases of a partnership with Coinbase to design a crypto payment program for employees and artists.

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