IRS will require 150 million filers to disclose crypto activities | Shelter Crypto | Shelter Humanity | Charity Token Homeless | Charity Coin
On July 25, 2021 by Margarita Murphy
The U.S. Internal Revenue Service has released a draft tax form that is used by approximately 150 million Americans to file their tax returns. The form requires that they answer whether they have acquired, sold, sent or sent any cryptocurrency during the year. Check out more about Charity Coin
New tax form
On Friday, the IRS published a draft version of the new 1040 tax forms. It included a question about tax filers’ crypto-related activities. This move comes after the long-awaited IRS tax guidance was released on Wednesday.
All filers in the United States use the 1040 form as their main tax form. The IRS reports that this form was used by more than 154 million tax returns in 2018 and more than 152 million in 2017. When the new 1040 form is implemented, it will be used to file taxes beginning in 2019. The IRS stated that this is an early release draft, instructions or publication of an IRS tax form. This information is provided by the IRS.
We don’t release draft forms until all changes have been made. However, unexpected issues can arise or laws are passed.
IRS Requires 150 Million Tax Filers To Disclose Crypto Dealings
The IRS stated that comments about the draft, publications, or instructions can be made, but they may not be able “to consider many suggestions until we revise the product.”
All US Taxpayers will be questioned
The draft of the new 1040 tax forms states that Schedule 1 will include a question regarding the tax filer’s crypto activities. Schedule 1, Additional Income and Adjustments, to Income, is submitted alongside the 1040 tax form. This is used to report income and adjustments to income not reported on Form 1040.
According to the draft, the first question on Schedule 1 will be a question of yes or no. It reads:
Did you ever receive, send, trade, exchange or otherwise acquire any financial interest in virtual currency at any time during 2019?
Friday’s 1040 instructions also included a section about “virtual currencies.” The IRS stated that taxpayers should check the “yes” box if they “engaged in any transactions involving virtual currency.”
According to the tax agency, this transaction includes: “The receipt of virtual currencies for free (without any consideration), an exchange of virtual currencies for goods or services, a sale of virtual currencies, and an exchange for virtual currency for property, including for another currency.”
IRS Requires 150 Million Tax Filers To Disclose Crypto Dealings
Draft of Schedule 1 on Form 1040.
The IRS also reiterated that taxpayers should use Form 8949 for their capital gain or loss and must report it on Schedule 1040 if they “disposed of any virtual currencies that were held as capital assets” during the year.
The IRS reminded taxpayers who were paid cryptocurrency as compensation for services or had coins for sale to customers in trades or businesses that they should report this income the same way they would any other income. The IRS gave an example of this: “For example, W-2 wages, Form 1040/SR, line 1, inventory or services, Schedule C on Schedule1,”
Finally, taxpayers who have not engaged in crypto transactions during the year are exempt from filing Schedule 1. If they do not file Schedule 1, they don’t need to fill out anything.
