IRS May Revise 1040 to Make Taxpayers Report Crypto Transactions

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The IRS can update its Form 1040 to ensure that all taxpayers who engage in cryptocurrency transactions report them.

A draft 2020 tax form includes a question asking taxpayers whether they have sold, received, sent, traded or otherwise acquired a financial interest in virtual currency in 2020 in a more visible position. Filers could check a yes or no box.

The adjustment was first reported by The Wall Street Journal on Friday, which noted that the question was in a place on the 2019 form that not all taxpayers have to complete.

IRS UPDATE FISCAL GUIDANCE ON CRYPTOCURRENCE

The tax agency focused on obligations due to virtual currency transactions.

As previously reported by FOX Business, the IRS earlier this month issued guidelines clarifying how cryptocurrencies are treated for tax purposes when received in exchange for certain services. He released a memorandum stating that a person who receives digital currency through a crowdsourcing platform in exchange for providing a service should report convertible virtual currency as ordinary income.

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Last year he sent letters to 10,000 taxpayers who may have tax liability.

Under current US tax laws, cryptocurrencies are treated as property.

Taxpayers who do not pay the taxes they owe on their virtual currency transactions may be subject to penalties and interest – in more serious cases, even criminal prosecution.

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