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IRS Revises Crypto Question on Tax Forms – Now Focusing on Taxable Cryptocurrency Transactions

The US Internal Revenue Service (IRS) has revised the crypto question asked on the main US tax form. Narrowing the scope of the question, the IRS now focuses on taxable cryptocurrency transactions.

tax form 1040. new crypto question

The IRS published a draft Form 1040 for tax year 2021 on Thursday. Form 1040 is the main tax form used to file personal income tax returns in the US. The draft form shows that the tax agency has slightly modified the crypto question.

The crypto question now reads: “At any time during 2021, did you acquire, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?”

Previously, the question read: “At any time during 2020, did you receive, sell, send, exchange, or otherwise receive any financial interest in any virtual currency?”

Draft IRS Form 1040 for the year 2021.

For the year 2021, the IRS has dropped the word “send” and replaced “acquisition” with “settlement.”

IRS Form 1040 for the year 2020.

Shehan Chandrasekhar, head of tax strategy at tax software company CoinTracker, explained that “the revised query only inquires about your taxable transactions compared to the wider scope of the 2020 edition.”

“While these changes don’t have a major impact on your taxes, they provide an indication of what the IRS has learned from the 2020 edition and where it is headed,” he added, elaborating:

Under the amended question, you do not need to check ‘yes’ if you send or receive cryptocurrency between wallets/exchanges, both of which are non-taxable transactions.

What do you think about the new crypto question on tax forms? Let us know in the comments section below.

image credit: Shutterstock, Pixabay, WikiCommons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell any products, services, or companies, or a recommendation or endorsement of any products, services or companies. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the Company nor the author is responsible, directly or indirectly, for any damage or loss alleged to be caused by or in connection with the use or reliance on any materials, goods or services mentioned in this article.

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