The Internal Revenue Service (IRS), responsible for enforcing federal tax laws in the United States, recently published a list of reporting obligations for the general public regarding cryptos as the time for filing the 2022 federal income tax return draws near.
The IRS recommends selecting ‘yes’ if you acquire, transfer, or sell cryptos
Since “virtual money” is a term that is no longer used for income tax purposes as of 2021, the IRS changed the phrase to “digital assets.” All US citizens must answer all crypto-related questions, irrespective of their activity.
The question about digital asset income appears on three different tax forms, specifically in the 1040 Individual Income Tax Return, the 1040-SR US Tax Return for Seniors, and the 1040-NR US Nonresident Alien Income Tax Return.
The IRS wants all crypto questions to be answered with a “yes” or “no”. However, the agency has provided other situations where one must tick the former.
The taxation incentives boil down to obtaining, acquiring, transferring, or selling cryptos for any financial gain, including mining and staking.
IRS crypto taxation framework defined
Eligible taxpayers must record all revenue associated with their transactions involving digital assets in addition to marking the “yes” box.
Per the IRS statement, one can only check “no” in the file if they have been holding crypto assets, have transferred assets between their wallets, or have bought crypto using fiat money.
Recently, a proposal was made to let residents in Arizona vote on changing the state’s constitution to include a property tax provision during the first session of the state Senate in 2023.