IRS Tax Updates on Cryptocurrency Tax
The IRS released more cryptocurrency tax guidance for the first time in over five years. With this, a new was added to the 1040 Schedule 1, which asks all taxpayers: if “At any time during 2019, did they receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
Starting in 2019, all tax preparers must ask their clients whether they have any cryptocurrency-related activities during the year. This means that clients must begin to get ready for additional scrutiny.
Does the IRS treat cryptocurrencies as?
Cryptocurrencies such as bitcoin are not taxed outright. In other words, simply owning bitcoin does not mean you owe taxes. Instead, you need to report the gains and losses you incur when buying, selling, and trading cryptocurrencies on your tax return.
In this sense, buying and selling cryptocurrencies triggers capital gains and losses reporting requirements just as they would for buying and selling stocks, another form of property.
To stay clear from the IRS, make sure to admen any prior returns in which you had any crypto transactions and provide all information on them moving forward.
If you have any questions regarding this, please contact our Washington Heights/Inwood NYC location, where our Tax preparation experts are willing to assist you with this matter.