The Internal Revenue Service (IRS) has updated the main form individual U.S. taxpayers use to report their income to include a question about cryptocurrencies.
Following the release earlier this week of the IRS’ long-awaited guidance for reporting crypto-related income, the IRS on Friday circulated a draft of the new Form 1040, Schedule 1, Additional Income and Adjustments to Income. The draft was shared in an email to tax software companies, which the agency also shared with journalists.
The sheet, prefaced by a warning that it’s only a draft and not an actual document for tax filing, asks at the top:
“At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
The main parts of the form, “Additional Income” and “Adjustments to Income,” both appear below this question.
“Taxpayers who file Schedule 1 to report income or adjustments to income that can’t be entered directly on Form 1040 should check the appropriate box to answer the virtual currency question. Taxpayers do not need to file Schedule 1 if their answer to this question is NO and they do not have to file Schedule 1 for any other purpose,” the IRS said.
The agency asked its software partners to send comments on the new form in the next 30 days.
The guidance released this week was the IRS’ second-ever given on virtual currencies, following five years of silence on the matter. The document provided answers to longstanding questions, addressing such issues as crypto received as a result of a hard fork, buying goods and services with virtual currencies, calculating the fair value of crypto holdings, and other matters.
Image of the Form 1040 via Shutterstock