CRYPTOCURRENCY REPORTING TO THE IRS
April 8, 2022 - Douglas Myser
Cryptocurrency reporting to the IRS. Due mainly to the Covid pandemic and the need for massive government intervention and spending programs, the U.S. government, Congress and the Biden Administration are looking for additional revenue sources. Tax increases per say are unpopular, but the next best thing for those looking to plug the gaps in the deficit and find ways to increase spending to keep the economy afloat, untaxed assets are the next best thing. Enter cryptocurrency, which was making headlines with incredible gains in value, surpassing even good stocks in the market. That may have been enough for those in Congress looking for another asset base to tax. It also comes at a time when the Panama Papers and Pandora Papers leaked evidence of rich politicians, celebrities, and sports figures, parking money overseas to hide money from taxation. All of this was a perfect storm for Congress. Cryptocurrency reporting to the IRS.
The tax forms rolled out last year highlighted the Congressional intent to tax crypto. On IRS tax forms the IRS started asking taxpayers whether they owned any Cryptocurrency. They had to answer either yes or no. This was in preparation for eventual taxation of the asset class. Now, 2022 is the second year in which the question has been on the front of Form 1040 and the other tax forms, where it would have to be answered by the taxpayer as to whether they owned the asset or not. The second year question was a bit different, asking not just if they owned it, but whether they sold, sent, exchanged, or otherwise acquired virtual currency. You can see form the additional details being asked that the IRS is gathering even more information to go after those who own the asset class.
If you eventually get caught up being taxed on crypto, and need options for dealing with your back taxes, we offer Superior Tax Resolution. We can determine every option you have in the Internal Revenue Code for Tax Relief, including those in the IRS Fresh Start Program, which has some, but not all the options you may want to know about.