The Internal Revenue Service (IRS) has modified the coding question on Form 1040, the tax form used by all US taxpayers to file an annual income tax return.
New tax question for crypto
The Internal Revenue Service (IRS) last week published a draft of Form 1040 for the 2022 tax year. Form 1040 is the tax form used to file individual income tax returns in the United States
The cryptographic question on the first page of Form 1040 now reads: “At any time during 2022, do you: (a) receive (as a reward, award, or compensation); or (b) sell, exchange, gift, or dispose of a digital asset (or interest) financial in a digital asset)?”
The new question expands on its previous version on Form 1040 for tax year 2021, which states: “At any time during 2021 did you receive, sell, exchange, or dispose of any financial interest in any virtual currency?”
In March, the IRS published a notice that stated: “All taxpayers who file Form 1040, Form 1040-SR, or Form 1040-NR must check one box that answers either ‘yes’ or ‘no’ to the virtual currency question. The question should be answered by all taxpayers, not just taxpayers who participated in a virtual currency transaction in 2021.”
The IRS explained that taxpayers can check “no” if they only 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 are limited to holding or transferring cryptocurrency within their own wallets or accounts, purchasing cryptocurrencies “with real currency, including purchases using real currency electronic platforms such as Paypal and Venmo” and “Participating in a combination of holding, converting or purchasing virtual currency as described above.”
What do you think of the new tax question for the IRS? Let us know in the comments section below.
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