- IRS clarifies cryptocurrency tax filing guideline
- Air drops mandated as tax-payable entity
- Cryptocurrency wallet transfers deemed non payable
New procedures are in line with the Internal Revenue Service (IRS) for cryptocurrency tax filing. A few days ago, the draft announcement clearly highlighted the IRS is focused on transactions and is paying minimal heed to cryptocurrencies.
Within the conventional monetary system, IRS’s tax forms are used to relay individuals’ and organizations’ financial information in both categories, i.e., filers and non-filers alike. US government expects to receive information related to organizational finances from tax-exempt firms too.
IRS Tax filing details
The current IRS draft holds up to 800 different tax forms and schedules through which financial reporting is facilitated. Individuals and organizations need to report details of their total income through which the report calculates total tax. Now the latest information has been added to include cryptocurrency tax filing.
Cryptocurrency Tax Filing
Taxation procedures on cryptocurrency purchases have been a controversial topic since its inception, with the chaos looming around deeming it a currency or a commodity. The new IRS draft clearly states that cryptocurrency owners needs not pay any tax, this holds true for non-active traders of 2019. Moreover, personal wallet transactions are not to be included in the filers form deeming those non-taxable as well.
Airdrops and transactions which necessitate coins transactions to wallet addresses have been mandated as tax-payable and require businesses to disclose during cryptocurrency tax filing.
The latest tax form “1040” includes the question “ Did you exchange, receive, or sell digital assets through any virtual system?” and a “No” tick box option, which confirms non -activity and dormancy on crypto trading platforms of the tax filer in the previous year.
The latest form clearly states that one does not have to pay any kind of tax if no other activity was carried out other than transferring cryptocurrencies in between wallets. Keeping fraudulent transactions in mind, cryptocurrency owners need to submit complete scam details to prove the transaction’s illegitimacy to not pay tax on them.