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Cryptocurrency owners, your next 1040 form from the IRS is going to put you on blast

Now, crypto owners will be unable to claim ignorance.

bitcoin cryptocurrency on table
Image: Unsplash

While cryptocurrency is still somewhat niche, millions of people in the US have bought and sold Bitcoin, Etherium, and more over the years. And many of them haven’t reported it on their taxes, even though they are technically supposed to.

Now, the IRS is changing how cryptocurrency is presented on the standard 1040 form and it’s going to put quite a few people on the spot. Prior, 1040-related cryptocurrency information was buried in the form and some people never even saw it, due to the section not being required for all filers. Now, however, the IRS is putting crypto front-and-center.

So, how is this IRS doing this? By putting a very simple question on the front page of the 1040 form. Tax filers will now be presented with: “At any time during 2020, did you sell, receive, send, exchange or otherwise acquire any financial interest in any virtual currency?” Taxpayers must check a “Yes” or “No” box.

By putting this question directly in front of taxpayers’ eyes, people will not be able to claim ignorance if they get caught. Morningstar notes that a similar strategy was used previously in regards to offshore banking. “A simple tax-return question about offshore financial accounts greatly aided [the IRS] crackdown on Americans hiding money abroad. Since 2009, it has brought in more than $12 billion from individuals.”

Honestly, this move makes sense and should help not only catch people that are purposely deceiving the IRS, but those that may literally just not realized that cryptocurrency has to be reported.

What do you think? Do you agree with the change to the 1040 form? Should crypto be taxed? Let us know down below in the comments or carry the discussion over to our Twitter or Facebook.

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Former KnowTechie editor.

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