The Internal Revenue Service (IRS) has updated the primary form used by individual U.S taxpayers to report their income. The form now includes a question about cryptocurrencies.
IRS uses US Tax Form to survey about cryptocurrencies
The IRS has finally published the guidance for reporting crypto-related income. The guidance dictates how people have to state their earnings gained from cryptocurrencies. The IRS circulated a draft of the new Form 1040, Schedule 1, Additional Income and Adjustments to Income. The draft was distributed through an email to tax software enterprises. The email was also shared with journalists.
The circulated form was only a draft and not an actual document for tax filing. The draft asked people if they had exchanged or had otherwise gained interest through virtual currencies in 2019.
The draft required users to disclose their earnings that cannot be entered directly into Form 1040. The draft demanded that taxpayers check the “appropriate box” to answer the virtual currency question. The answer to that would dictate whether they had to file Schedule 1 or not. If they answered NO, then Schedule 1 was not necessary, and they did not have to submit Schedule 1 for any other reason.
The main parts of the form the Additional Income and Adjustments to Income both appear after this question. IRS has asked the aforementioned enterprises to send their remarks about the form within the next thirty days.
The guidance released this week was the agency’s second on virtual currencies after five years of prolonged silence about the matter. The guidance answers some longstanding questions regarding cryptocurrencies. These included questions regarding the cryptos received as a result of a hard fork as well as questions about using virtual assets for the purchase of goods and services.