IRS 2020 draft 1040 puts crypto question front and center
The IRS has released the 2020 draft Form 1040, and it includes the question about whether a taxpayer invested in cryptocurrency or not near the top of the first page. This question first appeared for the 2019 tax year.
The wording of the question, “At any time during 2020, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency,” remains the same, save the year.
Cryptocurrency is currently taxed as property. Taxpayers are required to report any transactions involving virtual currency as U.S. dollars on their tax returns, and to do so, they need to determine its fair market value as of its transaction date. This has created opportunity for accounting firms nationwide to start offering cryptocurrency tax services, and indeed many medium to large firms already started offering crypto services before the IRS added the question to 1040 forms.
There are also tech companies offering solutions to help accurately report cryptocurrency investments, like Cointracking, Cointracker, Koinly and Accointing.
Cryptocurrency is not as stable as fiat currency. But actions such as taxation and regulation are part of the landscape that crypto enthusiasts believe will help its legitimacy and stability.