Internal Revenue Service (IRS) has just announced a new Schedule 1 for the 2019 tax season. This includes details on the above deductions and a proposal for tax breaks for interest rate contributions for students and health savings. There is also information about cryptocurrency tax rates.
The IRS is collecting information for cryptocurrency tax rates
In particular, in this new tax form, there is an extremely sharp question. These are “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”. It seems that the IRS is trying to gather more information on taxpayers’ purchases, holdings, cracks.
Share on this issue, Jeffrey Levine, CPA and director of financial planning at BluePrint Wealth Alliance in Garden City, said:
“As a taxpayer myself, I find this question very frustrating because it isn’t clear. For example, transferring cryptocurrency from one cryptocurrency wallet to another is just a standard deposit. The most conservative approach that a taxpayer can take is to consider any interaction you’ve had with virtual currency and whether there’s any way this can fall under this comprehensive list of what you could’ve engaged in during 2019. ”
And, indeed, we did not think wrong. This is evidence that the IRS is taking a closer look at cryptocurrency tax rates. In July 2019, the agency even sent emails to more than 10,000 taxpayers when it suspected they had traded cryptocurrency without reporting income and paying taxes.
The basics of cryptocurrency tax rates
If you have sold your cryptocurrency, you need to report the transaction. If you are increasing capital, you must pay the appropriate tax rate. Besides, when receiving cryptocurrency from an employer, you are subject to federal income tax, FICA tax, and federal unemployment tax. Yes, it is the same as the tax when you get paid. They must be reported on your Form W-2.
Meanwhile, independent contractors paid in cryptocurrency must pay self-employment taxes. For miners, the fair market value of it as of the day of receipt is included in your gross income. In the absence of proper reporting, you may be subject to audit and civil liability. You can even face jail sentences and fines of up to $ 250,000.
In cryptocurrency rates, crypto-assets are considered assets, similar to securities. Therefore, taxpayers should maintain expense records identical to the way to keep records for stocks and securities.
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