The Internal Revenue Service (IRS), has amended the crypto section of its draft instructions 2022 for the tax form 1040. “For example, digital assets include non-fungible tokens (NFTs) and virtual currencies, such as cryptocurrencies and stablecoins,” the tax agency detailed.
IRS has updated instructions for tax form 1040
The Internal Revenue Service released last week its draft 2022 instructions for the tax form 1040. The tax form 1040 can be used to file individual income tax returns within the United States. These instructions include several modifications that relate to cryptocurrency.
The section titled “Virtual Currency” has been replaced with one titled “Digital Assets.” The IRS detailed:
Any digital representation of value stored on a cryptographically secure distributed ledger, or similar technology are called digital assets. Digital assets can include both non-fungible tokens and virtual currencies like cryptocurrencies or stablecoins.
NFTs, and stablecoins are not listed in 2021 Instructions for Tax Form 1040.
The instructions explain that taxpayers must check the “Yes” box next to the question on digital assets on page 1 of the tax form 1040 if at any time during 2022, they “received (as a reward, award, or payment for property or services)” or “sold, exchanged, gifted, or otherwise disposed of a digital asset (or any financial interest in any digital asset).”
In August, the draft 1040 tax form was made available for 2022.
CNBC quoted Matt Metras as saying Monday, “Matt Metras is an enrolled agent at MDM Financial Services and a cryptocurrency tax specialist.”
I think that’s a good change. NFTs are not considered virtual currencies by people who trade them.
He added that the IRS’ “broader language” may include new categories, such as taxpayers receiving digital assets from “play-to-earn games.” Metras noted: “The IRS is always going to be behind the eight ball because they just can’t keep up with how fast the crypto space is changing.”
Bloomberg quoted Miles Fuller as the head of Government Solutions at Taxbit, and a former Senior Counsel with the Office of Chief Counsel of the IRS.
IRS has begun to consolidate their terminology regarding this digital asset term.
“So it means that it’s more likely than not in the near future, we’re gonna see those regs come out and the IRS continuing to move forward with sort of implementation of a regulatory regime,” he opined. “Probably sooner rather than later.”
What do you think about the IRS’ revised crypto-related instructions? Please leave your comments below.
Image creditShutterstock. Pixabay. Wiki Commons
DisclaimerThis article serves informational purposes. This article is not intended to be a solicitation or offer to sell or buy any product, service, or company. Bitcoin.com is not a provider of investment, tax, legal or accounting advice. This article does not contain any information, products, or advice that can be used to cause or alleged result in any kind of damage.