IRS to Include Cryptocurrency Checkbox on 1040s
The Internal Revenue Service (IRS) has struggled with the best way to manage cryptocurrency. Cryptocurrency, also known as virtual currency or digital assets and include example like Bitcoin, KlickEx, and Ethereum, are gaining in popularity. The government is trying to figure out the best way to include these assets in tax reporting. The most recent answer: a checkbox on Form 1040.
What will the checkbox look like?
According to a recent report by Forbes the checkbox will be proceeded by the following language: “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”
The language is important. Taxpayers generally only need to report the asset if they use it in a transaction. This is because the IRS normally taxes virtual assets as property, not currency. As a result, the agency generally requires reporting when the property owner transfers the asset. If such a transfer occurs during the tax year in question, the taxpayer will likely need to check the box and move forward with reporting the details of the transaction.
The inclusion of a checkbox on Form 1040 is the latest example of the IRS’ attempt to get taxpayers in compliance with reporting requirements. A failure to report transactions involving digital assets can result in allegations of tax fraud and other tax crimes. An attorney experienced in tax law can review your situation and discuss your options if you are unsure if your assets are in compliance with applicable tax law.
