- The IRS has released a new tax return 1040 for the US citizens.
- Over 150 million people use the form to pay their taxes.
- The first question on the form pertains to virtual currency transactions.
The Internal Revenue Service (IRS) has released a new tax return 1040 for US citizens and the first question on the form is about cryptocurrencies. The IRS requires all tax-paying citizens to declare if they have sold, bought, exchanged or acquired any digital assets. Notably, the form in question is used by about 150 million people to pay their taxes.
The IRS started to include a question concerning digital assets last year. However, the question in the form was used to declare any “Additional Income and Adjustments to Income.”
At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?
Some of the questions regarding cryptocurrency tax payments continue to remain unanswered. For instance, does the IRS treat interest earned from decentralized finance (DeFi) the same as interest earned from centralized finance (CeFi)? Are utility tokens considered “virtual currencies”? Are PoS block rewards treated the same as BTC or should they be treated like dividend re-investments? Nevertheless, including a cryptocurrency-related question on the front page of the major tax form indicates how important the sector is to the regulators.
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