The US Internal Revenue Service (IRS) changed the crypto question posed on the main US tax form. To reduce the scope of the question, the IRS is now focusing on taxable cryptocurrency transactions.
New crypto question on tax form 1040
The IRS released a draft Form 1040 for the 2021 tax year on Thursday. Form 1040 is the primary tax form for filing individual income tax returns in the United States. The draft form shows that the tax authority has slightly modified the crypto question.
The crypto question now reads: “Did you at any point in 2021 receive, sell, barter or otherwise dispose of financial interests in a virtual currency?”
The previous question was, “At any point in 2020, did you receive, sell, send, barter, or otherwise acquire any financial interest in a virtual currency?”
For 2021, the IRS removed the word “send” and replaced “acquire” with “dispose of”.
Shehan Chandrasekera, Head of Tax Strategy at tax software company Cointracker, stated: “The revised question only asks about your taxable transactions compared to the much broader scope of the 2020 version.”
He said, “While these changes won’t have much of an impact on your taxes, they do indicate what the IRS has learned from the 2020 version and which way it is headed,” says:
The revised question does not require you to tick “Yes” when sending or purchasing cryptocurrencies between wallets / exchanges, both of which are non-taxable transactions.
What do you think of the new crypto question on the tax form? Let us know in the comments section below.
Photo credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer of liability: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement for any product, service, or company. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author are directly or indirectly responsible for any damage or loss caused or allegedly caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.