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Wednesday, November 25, 2020

The US IRS agency adds crypto questions to tax forms

  • US tax agency, the IRS, is taking the next step in an attempt to get people to report their crypto earnings.
  • The IRS released a preview of the next year’s tax report, revealing that it contains a crypto question.
  • Americans will have to disclose their involvement with crypto, or lie on their tax report and break the law.

The US tax authority has been getting serious about cryptocurrency for quite some time. However, the US crypto users have tried their best to ignore the IRS’ warnings to carefully calculate their crypto income and include it in their reports.

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Now, the agency is taking the next step by adding the crypto question to its tax form 1040.

Tax form 1040 gets a crypto-related question in 2021

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Unfortunately for the US crypto users, the strategy to play ignorant about not including cryptocurrencies in their tax reports is getting riskier and riskier. With the IRS’ plan to include cryptocurrencies in its tax forms, that strategy will soon become obsolete.

As most likely know, Form 1040 is one that every American citizen has to file in order to report their federal income taxes. In a recently published a preview of the next year’s tax form, it is clear that the IRS now plans to take the next step and include a yes or no question that asks if the filler has earned interest by trading digital currency.

The question is just below the address line, so no one can miss it and play ignorant anymore. The tax agency’s new strategy may be seen as a bit of an aggressive one by some, but the IRS deems it necessary as it continues to ramp up scrutiny of the crypto sector.

Millions of Americans use crypto, but only a handful reports it

Most of the time, the agency has been focusing on criminal activities involving cryptocurrencies. However, it has been known to seek out and identify crypto users who failed to report their taxes.

These days, millions of American citizens own digital currencies, while only a small portion of them is including crypto while filing taxes. Even crypto exchanges like Coinbase have been trying to make calculating crypto taxes easier by offering special tools for tax reporting.

However, none of this helped with raising the percentage of users who actually do it, as most still believe that they can ignore the warnings and get away with it. Now, Americans have a choice to disclose their crypto earnings, or openly lie on their tax report, which would put them in much greater trouble if they get caught.

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