IRS Adds Specific Crypto Question to 2019 Tax Form

The IRS wants to know if you traded cryptocurrency in 2019, a question it has never openly asked taxpayers in the past.

In a new report released Monday covering fiscal year 2019, the agency listed cryptocurrency and the odd-job economy as two “emerging compliance areas that require attention” from the IRS. For crypto, this attention comes in the form of a new question on the 2019 1040 form (for additional income).

The question is at the very top of the form and reads: “At any time in 2019, have you received, sold, sent, traded or otherwise acquired a financial interest in a virtual currency?” “

The IRS already had official cryptocurrency guidelines, first published in 2014: the agency classifies cryptocurrency as property rather than currency, and taxpayers would therefore treat the sale of crypto as cash. capital gains (or losses) and disclose them on Form 8949 – if you choose.

In the past, the common attitude in crypto to disclosing crypto gains on your taxes was that there was little to be gained by doing so – you would risk an audit if you did and would probably go unnoticed if you didn’t. .

Now the IRS is getting more serious.

View of an ATM for the digital currency Bitcoin whose sales were suspended in a supermarket in Buenos Aires on August 15, 2019 (Photo credit to read JUAN MABROMATA / AFP via Getty Images)

Cryptocurrency supporters may view the change as a wake-up call – a sign that the IRS will be monitoring cryptocurrency trading gains more closely and targeting those who do not disclose it.

“This new question is truly unprecedented, as 170 million taxpayers are potentially going to have to answer this question,” said Austin Woodward, CPA and CEO of cryptocurrency tax software TaxBit. “If you’re lying, now the IRS can prove intent, whereas before, by pleading ignorance, you could sort of get away with it.”

The wording of the question also creates some confusion, as it not only mentions selling and receiving crypto, but also sending or exchanging. This has made some crypto scholars on Twitter question whether just sending bitcoin from one digital wallet to another requires disclosure of your taxes. This answer is no. In a detailed Virtual Currency Transactions FAQ on its website, the IRS states: “If you are transferring virtual currency from a wallet, address, or account you own, to another wallet, address or account that also belongs to you, then the transfer is a non-taxable event.

The IRS, in its report this week, also revealed that in 2019, it sent “educational letters” to more than 10,000 taxpayers “who may not have correctly reported virtual currency transactions.” . And the IRS warns, “Virtual currency, also known as cryptocurrency, will remain an important focal point for the IRS in 2020.”

Daniel Roberts is a senior editor at Yahoo Finance and covers bitcoin and blockchain closely. Follow him on Twitter at @read Danwrite.

Read more:

Facebook’s crypto plans in jeopardy as Libra association loses 7 “founding members”

Jack Dorsey’s love for bitcoin could cause problems for Square

JPMorgan Blockchain Leader: Why We Launched Our Own Cryptocurrency

Cryptocurrency CEO Who Paid $ 4.6 Million For Lunch With Buffett: “Could Be Unrealistic”

Exclusive: SEC quietly extends crackdown on ICOs

How to Report Bitcoin Earnings on Your 2017 Taxes

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, Youtube, and reddit.

Source link

Comments are closed.