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U.S. IRS wants to know your crypto ownership in updated income tax form

Mon, 14 Oct 2019, 07:00 am UTC

The U.S. Internal Revenue Services (IRS) has added a question about cryptocurrencies in its updated 1040 income tax form for the coming tax season.

As per a draft of the “Additional Income and Adjustments to Income” section, the following question has been added: “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?

The question expects a direct yes or no answer, and no additional details are needed.

However, the draft, which was shared with tax software firms, came with a warning that it is not yet an actual document for filing taxes.

The main parts of the form, “Additional Income” and “Adjustments to Income,” appeared below the question.

Taxpayers who file Schedule 1 to report income or adjustments to income that can’t be entered directly on Form 1040 should check the appropriate box to answer the virtual currency question. Taxpayers do not need to file Schedule 1 if their answer to this question is NO and they do not have to file Schedule 1 for any other purpose,” the IRS said.

When implemented, the new 1040 form will be used to file taxes starting in 2019. The office has given its software partners 30 days to send comments and feedback.

This is an early release draft of an IRS tax form, instructions, or publication, which the IRS is providing for your information,” IRS said.

We generally do not release draft forms until we believe we have incorporated all changes, but sometimes unexpected issues arise, or legislation is passed,” it clarified.

The adjustments come a week just after the service released new guidance in the form of Revenue Ruling for tax reporting on cryptocurrency airdrops and hard forks. The Revenue Ruling 2019-24 intends to help taxpayers understand reporting obligations for specific transactions that involve cryptocurrencies.

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