U. S. Tax Service is reminded of tax on income from cryptocurrencies
2023.01.28 07:20
U. S. Tax Service is reminded of tax on income from cryptocurrencies
By Tiffany Smith
Budrigannews.com – The Internal Revenue Service (IRS), which enforces federal tax laws in the United States, has published a list of reporting requirements for individuals who deal with cryptocurrencies. This comes as the 2022 federal income tax return filing deadline draws nearer.
In income tax-related reporting forms prior to 2021, the IRS used the term “virtual currencies.” Since then, the term has been updated to “digital assets.” “regardless of whether they engaged in any transactions involving digital assets,” all citizens of the United States are required to respond to inquiries regarding cryptocurrencies.
The question about income from digital assets appears on three forms: the Individual Income Tax Return (Form 1040); 1040-SR, Seniors’ U.S. Tax Return; and the U.S. Nonresident Alien Income Tax Return, also known as 1040-NR, which asks:
“Did you at any time in 2022: ( a) Receive (as a payment for goods or services or as a reward); or (b) dispose of a digital asset (or a financial interest in a digital asset) in any other way?
Although all tax filers are required to respond “yes” or “no” to the aforementioned question, the IRS provided nine scenarios in which one must respond “yes,” as shown below:
Declarations related to cryptocurrencies on the IRS checklist. Source: irs.gov
The aforementioned suggestions all boil down to receiving, earning, trading, or selling cryptocurrencies for any monetary gain, including mining and stakes. Eligible taxpayers must report all income from digital asset transactions in addition to checking “yes.”
Instructions for Form 1040 (and 1040-SR) that were updated in 2022. Source: irs.gov
If a person has only been holding crypto assets, moved assets between wallets they own, or purchased cryptocurrencies against fiat currencies, they can only select “No” in the filing.
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