IRS prioritizes cryptocurrency, now first question on 1040 tax form – bitcoin news
The new U.S. tax form is out, and the cryptocurrency question is the first of the main 1040 tax form used by around 150 million people to file their taxes. The Internal Revenue Service (IRS) requires all tax filers to report whether they have received, sold, traded, or acquired cryptocurrency.
IRS Focuses On Crypto
The IRS has released a draft tax form for the 2020 filing. The cryptocurrency question is now the very first on Form 1040, the primary tax form used by U.S. tax filers. Each year, around 150 million people use this form to file their taxes.
The question reads: “At any time in 2020, have you received, sold, sent, traded or otherwise acquired a financial interest in a virtual currency?” It only requires a yes or no answer.
The IRS began including the issue of cryptocurrency in its tax form last year. However, the question previously appeared on Schedule 1, the form used to report “additional income and income adjustments”. Some tax experts believe the agency’s crypto question is unconstitutional.
Twitter user Justin Winston Ono Wales, who said he was a crypto lawyer, believes the IRS question “is far too broad and should be challenged.” He explained, “If you get paid in crypto, you have to report it as salary. If you have made any gains from a crypto investment, you should report it as a cap gain. But constitutionally, the government shouldn’t know if you’ve bought, received, or acquired crypto, because crypto isn’t just money … public channels like Bitcoin require native currency (BTC) to access their network. . BTC is solid money, but it’s also a lot more, ”he adds:
The updated IRS form does not (yet) ask you to list your crypto holdings, but to report whether you received or sold crypto during the year, for whatever reason. This information goes beyond the information the IRS needs to do its job.
The IRS has made no secret of its attempt to collect more taxes from cryptocurrency owners. Last year, he sent around 10,000 letters to people suspected of owing crypto-related taxes reminding them to pay. However, the Taxpayer Advocate Service, an independent organization within the IRS, said the letters violated taxpayer rights.
The IRS issued new cryptocurrency tax guidelines in October last year to update one released in 2014. In late June, the agency requested information on privacy coins and technologies that obscure cryptographic transactions. The following month, Bitcoin investor Jim Harper filed a lawsuit against IRS Commissioner Charles P. Rettig and a number of agents for illegally seizing financial documents from crypto exchanges.
What do you think about the IRS prioritizing the issue of crypto? Let us know in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons, IRS
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