The IRS added a clause on cryptocurrencies to the main body of Form 1040. Previously, the question of ownership of cryptoassets was in Appendix 1, which was not filled out by all taxpayers.
The IRS has moved the issue of ownership of cryptocurrencies to the main body of Form 1040, which is filled out by most taxpayers in the country. Now the question “During 2020, did you receive, sell or otherwise acquire financial interest in any virtual currency?” located at the top of the form under the fields where you need to enter personal data.
In October 2019, the IRS circulated a draft of a new Form 1040, Appendix 1 – Additional Income and Income Adjustments. However, this application does not fall into the hands of all taxpayers. Gilded Chief Financial Officer Joey Ryan said the updated filing form suggests much more interest from the IRS in cryptocurrencies than previously thought.
“If some people were previously oblivious to the IRS’s actions in this area, they may simply not have completed Appendix 1, which is essentially for reporting additional income. However, now the issue of cryptocurrencies has been placed in the main body of Form 1040, so no one has a chance to skip this question or not understand what is going on, ”he said.
The innovation is likely to increase the number of taxpayers reporting on cryptocurrencies who were not previously aware of this need. This will have a major impact on the current tax season, according to Daniel Hannum, COO Zenledger.
“In 2019, there really weren’t many people who filled out Appendix 1. The fact that the question of cryptocurrencies is now in the main part of the form will significantly increase the coverage of reporting on income from cryptocurrencies,” he said.
Some tax officials have raised concerns with the IRS about the wording of the question, as it is unclear whether buying and holding qualifies as a cryptocurrency transaction. However, according to Hannum and Ryan, the IRS will clarify the remaining issues in the near future.
Recall that recently, the US Internal Revenue Service (IRS) again sent out letters to cryptocurrency investors warning them about the need to provide full information about the profit from operations with cryptoassets.
