The U.S. Internal Revenue Service (IRS), the agency responsible for collecting federal taxes in the country, is tackling cryptocurrency. It has already ruled that digital currencies are a form of property and last week set in place how earnings on any gains from hard forks should be classified. The agency has made another move and it seems that things are getting more serious.
According to an article by Kelly Phillips Erb on Forbes, on a form that is used in conjunction with the most commonly used tax filing form in the U.S., Form 1040, taxpayers could now see an entry asking if they have any financial interest in digital currencies. It comes in the form of a checkbox on the 2019 Form 1040, Schedule 1, Additional Income and Adjustments to Income, and specifically asks, “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?“
This is only a draft change—it hasn’t yet been cast in stone. The IRS explains of the change, “Taxpayers who file Schedule 1 to report income or adjustments to income that can’t be entered directly on Form 1040 should check the appropriate box to answer the virtual currency question. Taxpayers do not need to file Schedule 1 if their answer to this question is NO and they do not have to file Schedule 1 for any other purpose.”
However, there is apparently some room for the IRS to improve its crypto discovery activity. The question appears on the Schedule I form, but not all taxpayers have to use the form—they may not even realize they should use it just for this single question when no other questions on the form have been applicable in the past.