• The Internal Revenue Service (IRS) has recently published a list of reporting obligations for cryptos as the time for filing the 2022 federal income tax return draws near.
• All US citizens must answer all crypto-related questions, irrespective of their activity.
• Eligible taxpayers must record all revenue associated with their transactions involving digital assets in addition to marking the „yes“ box.
The Internal Revenue Service (IRS) recently released a list of reporting obligations for the general public regarding their cryptocurrency activities as the deadline for filing 2022 federal income tax returns draws nearer. The new regulations require all US citizens, regardless of their activity, to answer all questions related to cryptocurrency on their tax forms, with the IRS suggesting that the ‘yes’ box be ticked for all questions.
The taxation incentives apply to those who acquire, transfer, or sell cryptocurrency for any financial gain, including mining and staking. This includes any revenue associated with transactions involving digital assets, with the IRS recommending that ‘no’ be marked only if crypto assets have simply been held or transferred between wallets or bought with fiat currency.
The IRS has replaced the phrase “virtual money” with “digital assets” in its updated tax forms, with the new phrase appearing on three different forms, namely the 1040 Individual Income Tax Return, the 1040-SR US Tax Return for Seniors, and the 1040-NR US Nonresident Alien Income Tax Return.
With the new regulations, the IRS seeks to ensure that all taxpayers are aware of their responsibilities and obligations when it comes to cryptocurrency transactions. The agency has also proposed that Arizona residents vote on changing the state’s constitution to include a provision for cryptocurrency in the state’s taxation framework.
It is important for taxpayers to be aware of their responsibilities when it comes to cryptocurrency transactions, as failure to comply with the new regulations could result in hefty fines or other legal action. The IRS encourages all taxpayers to take the time to review the updated information related to digital asset taxation, and to make sure that they understand their responsibilities as a taxpayer. With the 2022 federal income tax return deadline quickly approaching, it is important for taxpayers to be aware of their obligations and to ensure that they are in compliance with the new regulations.