The Internal Revenue Service (IRS), has amended the crypto question on Form 1004, the tax form that all U.S taxpayers use to file their annual income taxes returns.
Answer to a New Cryptotax Question
Last week, the Internal Revenue Service (IRS), published a draft Form 1040 to be used in 2022’s tax year. The tax form Form 1040 can be used to file individual income tax returns within the United States.
The crypto question on the front page of Form 1040 now reads: “At any time during 2022, did you: (a) receive (as a reward, award, or compensation); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”
The new question expands on its previous version on Form 1040 for the tax year 2021, which states: “At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?”
In March, the IRS published a notice stating: “All taxpayers filing Form 1040, Form 1040-SR, or Form 1040-NR must check one box answering either ‘Yes’ or ‘No’ to the virtual currency question. The question must be answered by all taxpayers, not just taxpayers who engaged in a transaction involving virtual currency in 2021.”
The tax authority explained that taxpayers can check “no” if they merely own cryptocurrency and have not engaged in any crypto transactions at any time during the year. In addition, they can check “no” if their activities were limited to holding or transferring crypto within their own wallets or accounts, purchasing crypto “using real currency, including purchases using real currency electronic platforms such as Paypal and Venmo,” and “engaging in a combination of holding, transferring, or purchasing virtual currency as described above,” the IRS detailed.
How do you feel about the IRS new tax question? Please leave your comments below.
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