Paper checks are so 2021. There's now a new way to spend your tax refund: cryptocurrency.
The tax filing service TurboTax has teamed up with Coinbase to allow its customers to have their tax refunds automatically deposited into a Coinbase account and immediately converted to cryptocurrency, the crypto company said in a blog post Thursday.
The news comes as cryptocurrency is making inroads into various aspects of our financial lives, like credit card rewards and paychecks. In January, New York City's Eric Adams announced that his first paycheck as mayor would be automatically converted to Ethereum and Bitcoin via Coinbase. (He picked a particularly bad day to do so, though, as the crypto market tanked soon after.)
Last year's average tax refund was $2,815, which could get you about 1/14th of one Bitcoin at its current price.
How to get your tax refund in cryptocurrency
TurboTax customers who want to receive their refunds in cryptocurrency can file their returns via the company's Coinbase section of the website. Coinbase customers can also get a $20 discount when using TurboTax. (FYI: An estimated 70% of taxpayers are eligible to file taxes for free through an IRS initiative TurboTax no longer participates in.)
You do need to have a Coinbase account for this to work. Coinbase doesn't charge a fee to create an account or deposit tax refunds into an account, but there are fees for trading cryptocurrency. Once you've filed your tax return, you'll be asked to enter your account details or set up an account.
Then, you'll select the cryptocurrency — or U.S. dollar, if you want to trade later or spend the money via Coinbase Visa Card — in which you want to get your refund. Coinbase has a full list of instructions in its blog post.
Should you get your tax refund in cryptocurrency?
Cryptocurrency is a risky, volatile asset, which has been proven by its dramatic price swings. Bitcoin's price hit an all-time high near $68,000 per coin in November and now sits near $39,000.
“Your $100 might not necessarily be $100 by the time it’s cashed in," Daniel Rodriguez, chief operating officer at Hill Wealth Strategies, told Money for our guide to gifting cryptocurrency.
Still, if you want to invest in cryptocurrency, financial advisors tend to recommend keeping it to a small percent of your overall investment portfolio — no more than 5%. Experts say you may also want to stick with the more well-known, established cryptos like Bitcoin and Ethereum when getting started, rather than buying random altcoins.