The new U.S. tax form is out and the cryptocurrency question is the first one on the main 1040 tax form
The Internal Revenue Service (IRS) has published a draft tax form for the 2020 filing. The cryptocurrency question is now the first question on the Form 1040, the chief tax form used by individual taxpayers in the United States. Every year, about 150 million people use this method to file taxes.
The new U.S. tax form is out, and the cryptocurrency question is the first one on the main 1040 tax form
The question reads:
“At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
It only requires a yes or no answer. The IRS began including the question of cryptocurrencies in tax forms last year. However, the question was previously on Schedule 1, the form used for declaring “Additional Income and Adjustments to Income”. Some tax experts believe that the agency’s crypto question is unconstitutional.
IRS’ 2020 draft tax form showing that the cryptocurrency question is the very first one on Form 1040, which is used by about 150 million individuals in the U.S. to file their tax returns
Twitter user Justin Winston Ono Wales, who claims to be a crypto attorney, believes the IRS question is too broad and needs to be challenged.
“If you get paid in crypto, you must declare it as wages. If you realized gains from a crypto investment, you must declare it as a cap gain. But constitutionally, the gov should not know whether you purchased, received, or acquired crypto because crypto is not just money … public chains like Bitcoin requires a native currency (BTC) to access its network. BTC is sound money, but also much more.”
IRS’ 2019 tax form showing the crypto question on Schedule 1, the form used for declaring additional income
“The updated IRS form doesn’t ask you to list your crypto holdings (yet), but to declare if you received or sold crypto within the year no matter the reason. This information is beyond the purview of information the IRS needs to do its job.”
The IRS has made no secret of its attempt to collect additional taxes from crypto owners. Last year, it sent around 10,000 letters to people on suspicions of crypto-related tax debt to remind them to pay. However, the Taxpayer Advocate Service said that the letters violated taxpayer rights.
The IRS issued a new cryptocurrency tax guide last October to update the guidelines published in 2014. In late June, the agency requested information on privacy and technology coins tamper with cryptocurrency transactions. The following month, bitcoin investor Jim Harper filed a lawsuit against IRS Commissioner Charles P. Rettig and several agents over the illegal seizure of financial records from crypto exchanges.
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