The US IRS or the Internal Revenue System has recently updated its standard 1040 Income tax form and added a question regarding the ownership of cryptocurrencies in a draft. The department shared the draft of the amended form with the tax software firms assuring that it is not an actual document to file taxes, rather just a draft. The tax software firms were given 30 days’ time to send feedback about the new amendment made in the form. In connection to this, the IRS said,
This is an early release draft of an IRS tax form, instructions, or publication, which the IRS is providing for your information, We generally do not release draft forms until we believe we have incorporated all changes, but sometimes unexpected issues arise, or legislation is passed.
So, any crypto user filing the income tax need to provide a legitimate answer regarding his possession of crypto assets. This will help the taxpayers to understand reporting obligations for specific transactions involving cryptocurrencies.
In the “Additional Income and Adjustments to Income, section of the latest 1040 income tax form”, a new question is added that reads as, “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?” The question demands a straightforward answer is “yes” or “no” with no further clarification to be entertained.
After its implementations, the new 1040 tax form will be used to file taxes from 2019 onwards until any new changes get amended in the form.