June 28, 2021
On page 1 of the IRS 1040 form it asks: At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? If you transacted in crypto AT ALL, the answer would be Yes! And then you proceed to report the taxable transactions.
The IRS is starting to use technology like data analytics and artificial intelligence to help sift through billions of transactions in the digital world. If you receive a 1099B form, it’s easy… you just include that in your taxes to report your crypto transactions. But if you use coinbase or another platform that only provided a data dump, you will have to calculate the gain/loss yourself.
Do your best to calculate and report your transactions. Keep a file of your calculations in case of audit so you won’t be in trouble for tax evasion. IRS definition of tax evasion is: The failure to pay or a deliberate underpayment of taxes.
IRS is hoping to drop the threshold to $10k so hopefully even smaller platforms will have to report your transactions in a neat little package that you can easily report to the IRS.
Disclaimer: For informational purposes only. Not Tax or Legal Advice.