US: IRS Tax Form For 2021 Focuses On Taxable Crypto Transactions
The U.S. Internal Revenue Service (IRS) recently modified the crypto question included in the main U.S. tax form. The scope of the question was reduced, and the IRS is now focusing on taxable cryptocurrency transactions.
New Crypto Question on Tax Form 1040
The IRS released a draft Form 1040 for the tax year 2021 earlier this week. Form 1040 is the main tax form used for filing individual income tax returns in the United States. The new draft form reveals that the IRS has modified the crypto question slightly.
The new crypto question is:
“At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?”
While it previously was:
“At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
Draft IRS Form 1040 for the year 2021.
For the year 2021, the IRS has removed the word “send” and replaced “acquire” with “disposed of.”
IRS Form 1040 for the year 2020.
Head of Tax Strategy at tax software company Cointracker, Shehan Chandrasekera, explained that “The revised question is aimed at only asking about your taxable transactions compared to the much broader scope of the 2020 version.”
He pointed out,
“Although these changes have no big impact on your taxes, it hints at what the IRS has learned from the 2020 version and the direction it’s heading”
“Under the revised question, you don’t have to check ‘Yes’ if you send cryptocurrency in between wallets/exchanges or acquire them, which are both non-taxable transactions.”
