IRS expands crypto question to tax form – Taxes Bitcoin News

IRS expands crypto question to tax form – Taxes Bitcoin News

The Internal Revenue Service (IRS) has changed the crypto question asked on Form 1040, the tax form used by all US taxpayers to file their annual income tax return.

New Crypto Tax Tax Issue

The Internal Revenue Service (IRS) released last week the draft Form 1040 for tax year 2022. Form 1040 is the tax form used to file US tax returns for individuals

The crypto question on the cover of Form 1040 now reads: “At any time during 2022, did you: (a) receive (as a reward, reward, or compensation); or (b) sell, exchange, give away or otherwise dispose of the digital asset (or a financial interest in the digital asset)?”

IRS expands crypto question to tax form – Taxes Bitcoin News
Draft Form 1040 for 2022. Source: Tax Administration

The new question expands on its previous version of Form 1040 for the 2021 tax year, which states: “At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?”

IRS expands crypto question to tax form – Taxes Bitcoin News
Form 1040 for 2021. Source: Tax Administration

In March, the IRS released a notice stating, “All taxpayers filing Form 1040, Form 1040-SR, or Form 1040-NR must check one box answering ‘Yes’ or ‘No’ to the virtual currency question. The question must be answered by all taxpayers, not just taxpayers who in 2021 were involved in a transaction involving virtual currency.”

The IRS explained that taxpayers can check “no” if they only own cryptocurrency and have not been involved in any crypto transactions at any time during the year. Additionally, they can check “no” if their activities were limited to holding or transferring cryptocurrencies in their own wallets or accounts, purchasing cryptocurrencies “using real currency, including purchases through real currency electronic platforms such as Paypal and Venmo” and “engaging in combination with the holding, transfer or purchase of virtual currency as described above,” the IRS detailed.

What do you think about the IRS’s new tax issue? Let us know in the comments section below.

IRS expands crypto question to tax form – Taxes Bitcoin News

Kevin Helms

An Austrian economics student, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests lie in bitcoin security, open-source systems, network effects, and the intersection between economics and cryptography.

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