The IRS is ramping up their efforts to enforce laws in this area. If you haven’t been contacted by the IRS but are using crypto currency in some form, then be prepared this tax season to claim your activity on your freelance tax return.
According to early drafts of the 2019 individual tax return form (Form 1040) released by the IRS, taxpayers will be required to check a box if they have actively used virtual currency during the tax year. This is the specific question (subject to being changed by the IRS) that you are likely to be required to answer on your tax return: “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”
All of this IRS activity is a sure sign that any crypto currency activity is going to receive a higher level of scrutiny beginning in the 2019 tax season. In addition, the agency has released updated guidance related to hard forks and air drops of virtual currency as well as new crypto currency FAQs.
These new updates should help you fine tune your understanding of basic virtual currency tax rules. If you need assistance with back taxes related to virtual currency, contact our NYC CPA office for crypto currency tax guidance.