IRS Issues Reporting Obligations For Tax Payers Regarding Crypto Dealings

• IRS has specified nine cases in which the answer must be “Yes.”
• Taxpayers who meet the qualifications must disclose any and all gains.

The Internal Revenue Service (IRS), which enforces United States federal tax laws, has issued a list of reporting obligations for the general public concerning cryptocurrencies as the 2022 federal income tax return filing due date approaches.

IRS tax forms that formerly referred to “virtual currency” up to 2021 have been changed to “digital assets.”  Every American must respond to cryptocurrency queries irrespective of whether they participated in any deals involving digital assets or not.

Must Disclose Any and All Gains

U.S. tax forms 1040 (Individual), 1040-SR (U.S. Tax Return for Seniors), and 1040-NR (U.S. Nonresident Alien Income Tax Return) all have a question concerning digital asset income. All tax returns must include a response to the above question, and the IRS has specified nine cases in which the answer must be “Yes.”

The aforementioned guidelines apply to any scenario in which a person receives, generates, transfers, or sells cryptocurrency for financial gain. Taxpayers who meet the qualifications must disclose any and all gains made from the sale or exchange of digital assets on their tax returns, therefore it’s important to be sure to select the box if users fall into this category.

If one has been doing nothing more than storing cryptocurrency, moving funds between your own wallets, or buying cryptocurrencies with fiat currency, then you may safely select “No” on the form.

On the other hand, the SEC now has more leverage to regulate cryptocurrency after the fall of FTX. Washington and Wall Street are hearing increasingly strong calls for tougher enforcement. In a recent budget increase, Congress provided more funding to the financial