The US Internal Revenue Service (IRS) has changed the crypto question asked on the main US tax form. Reducing the scope of the matter, the IRS is now focusing on taxable cryptocurrency transactions.
New crypto question on tax form 1040
The IRS on Thursday released a draft Form 1040 for the 2021 tax year. Form 1040 is the primary tax form used for filing personal income tax returns in the United States. The draft form shows that the tax agency changed the crypto issue slightly.
The crypto question now reads: “At any time in 2021, have you received, sold, traded or otherwise alienated any financial interest in a virtual currency?” “
Previously, the question was, “At any time in 2020, have you received, sold, sent, traded or otherwise acquired a financial interest in a virtual currency?” “
For the year 2021, the IRS has removed the word “send” and replaced “acquire” with “dispose of.” “
Shehan Chandrasekera, head of tax strategy at tax software company Cointracker, explained that “the revised question is only about your taxable transactions compared to the much broader scope of the 2020 version.”
He said, “While these changes don’t have a big impact on your taxes, it hints at what the IRS has learned from the 2020 version and where it’s headed,” elaborating:
Under the revised question, you do not have to check “Yes” if you are sending cryptocurrency between wallets / exchanges or acquiring them, both of which are tax-free transactions.
What do you think of the new crypto question on the tax form? Let us know in the comments section below.
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