April 3, 2022 - Douglas Myser

IRS adding crypto question to returns. In IRS news release that all American taxpayers must answer the question on the tax form about cryptocurrency. The question, which on form 1040 is just below the address area, says, "At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency ?" Taxpayers must check either the yes or no box that is right after that question., whether they had any transactions involving virtual cryptocurrency during that tax year. The release also discusses the Form 1040 instructions describing what it said were the most common types of cyrpto transactions that require answering yes to. IRS adding crypto question to returns.

Some of those questions on the form are: Regarding the receipt of virtual crypto as payment for goods or services that were provided. The receipt or transfer of virtual currency for free (without providing any consideration) that does not qualify as a bona fide gift. The receipt of new virtual currency as a result of "mining" or "staking" activities. The receipt of virtual currency as a result of a "hard fork". An exchange of virtual currency for property, goods, or services. An exchange or trade of virtual currency for another virtual currency. The sale of virtual currency. Any other transaction of a financial interest in virtual currency. Taxpayers can check the no box if these occurred. Holding virtual currency in a taxpayer's own wallet or account. Transferring virtual currency between wallets or accounts the taxpayer owns or controls. Or, purchasing virtual currency using real currency.

For those that have transactions, and understand that taxation and regulation of crytpo is coming, options for Tax Relief exists with a Tax Resolution firm, including the IRS Fresh Start Program, which can determine your options for exploring potential reductions in any tax. Better to go that route, than eventually end up with a IRS Wage Garnishment. Taxation of crypto is happening quickly, as the government looks for more revenue sources to combat the Covid government spending.