IRS expands crypto issue on tax form
The Internal Revenue Service (IRS) has changed the crypto question asked on Form 1040, the tax form used by all US taxpayers to file an annual tax return.
New crypto tax question
The Internal Revenue Service (IRS) released draft Form 1040 for the 2022 tax year last week. Form 1040 is the tax form used for filing personal income tax returns in the United States.
The crypto question on the first page of Form 1040 now reads: “At any time in 2022, did you: (a) receive (as reward, reward or compensation); or (b) sell, exchange, gift or otherwise dispose of a digital asset (or financial interest in a digital asset)? »
The new question expands on its previous version on Form 1040 for the 2021 tax year, which states, “At any time in 2021, did you receive, sell, trade, or otherwise dispose of a financial interest in virtual currency?
In March, the IRS issued a notice stating, “All taxpayers filing Form 1040, Form 1040-SR, or Form 1040-NR must check a box that answers either ‘Yes’ or ‘No’ to the question about the virtual currency. The question needs to be answered by all taxpayers, not just taxpayers who engaged in a transaction involving virtual currency in 2021.”
The tax office explained that taxpayers can tick “no” if they simply own cryptocurrency and have not made any crypto transactions at any time during the year. Additionally, they can tick “no” if their activities were limited to holding or transferring crypto into their own wallets or accounts, buying crypto “using real money, including purchases using electronic platforms in real currency such as Paypal and Venmo” and to “engage in a combination of holding, transferring, or purchasing virtual currency as described above,” the IRS detailed.
What do you think of the new tax question from the IRS? Let us know in the comments section below.
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