IRS Wants To Know About Your Crypto Transactions This Year

The IRS wants to know about your crypto investments and tax payers will have to report their cryptocurrency gains this year.

CNBC reported that Form 1040 used to file taxes has a question about "virtual currency" at the top of the first page. They have to report earnings from transactions in 2021 that involve bitcoin, ethereum, dogecoin and other cryptocurrencies.

The question covers a broad range of crypto transactions. Investors will have to include all earnings from any crypto-related activity like cryptocurrency mining, crypto-based rewards and even free cryptocurrencies from airdrops, the report quoted Shehan Chandrasekera, an accountant and head of tax at CoinTracker, as saying. He also said converting crypto to cash, crypto-to-crypto conversions and even purchasing goods and services fall under the reporting requirement.

The report added that asking about crypto transactions is not new but there is a new emphasis on them this year.

Cryptocurrencies have been blamed for helping facilitate tax evasion, which the Biden administration is targeting as it tries to generate revenue for its social and infrastructure spending programs. The recently passed Infrastructure Bill requires yearly mandatory tax reporting from digital currency brokers, a term that is broady defined.

Crypto exchanges will have to record the social security details for each individual carrying out crypto transactions and report to monetary authorities.

″[The IRS] is trying to capture the tax revenue in that growing market,” Chandrasekera told CNBC. “Every year, there’s a new wave of people coming into crypto who think it’s not taxed.”