Blog by Kim Storen, EA – Managing Tax Accountant, Business Services Manager

Bitcoin, the most common type of virtual currency, was created in 2009 by an anonymous individual referred to as Satoshi Nakamoto. Currently there are over 1500 types of virtual currency including Bitcoin, Ripple, Etherium, and Tether. The Virtual Currency market is exploding across the world and the IRS is now starting to get smarter about the VC market.

In July, 2018, the IRS announced a compliance campaign to be undertaken by the Withholding and International Individual Compliance practice area. On the 2019 Individual tax return, the IRS has added a new question on the front page of the return: “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?” Just as a frame of reference, the IRS added a similar question several years ago inquiring if a taxpayer had foreign accounts and the fine for non-filing was $10,000. The IRS has not provided any guidance on fines for non-filing of virtual currency transactions but we suspect it will be hefty.

If you are using or mining virtual currency, please contact our office.

 

There’s A New Question On Your 1040 As IRS Gets Serious About Cryptocurrency

Article from Forbes.com

Days after the Internal Revenue Service (IRS) released two new pieces of guidance for taxpayers who engage in transactions involving virtual currency, the IRS announced another compliance measure: a checkbox on form 1040. The checkbox, which appears on the early release draft of the form 1040, asks taxpayers about financial interests in virtual currency.

The checkbox appears on the second early release draft of the 2019 Form 1040, Schedule 1, Additional Income and Adjustments to Income. The checkbox is at the top of Schedule 1, which is used for reporting income or adjustments to income that can’t be entered directly on the front page of form 1040.

The question is: At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?

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