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Crypto Transactions Need Reporting This Tax Season: IRS

With so many US citizens investing their time and money into cryptocurrencies, and major players in the fray, IRS has taken the stance of making every taxpayer about their crypto transactions last year. As reported by Marketwatch, this measure comes with whether the taxpayer has sold, exchanged, or disposed of virtual currency.

How to follow the new rules

 The tax form of 1040 has to be filled with a ‘yes’ if you have made crypto transactions as mentioned above, which is included on the first page, followed by basic personal information regarding name and address. This definitely means the IRS wants you to come clean with your crypto transactions and enforce tax rules for the same. This may come as a fair warning, probably before stricter regulations come into play, reports CNBC.

However, certain conditions exempt you from ticking the ‘yes’ box

  • Receiving virtual currency for services and goods as a payment
  • Transferring or receiving virtual money without charge (free) also not considered as a gift as well under tax rules.
  • Reviving new virtual currency for mining and other staking activities
  • Receiving currency gained through a hard fork
  • Exchange or trading of virtual currency for another virtual currency
  • Exchange of virtual currency for either property, goods, or services
  • Sale of a virtual currency
  • Any other disposition of financial interest in virtual currency doesn’t count 

Filling the IRS form

So, the taxpayer can now look at what actually counts as per IRS rules. The rules state that if the taxpayer happens to dispose of any virtual currency in the past year. He held as a capital asset through sale, exchange, or transfer needs to be notified as ‘yes.’ it will help figure your capital gain or loss. The reporting is done as you would for any other income.

The checkbox cannot be left unanswered if you have to crypto transaction. The person needs to mention a ‘no.’

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