The US IRS has changed the process for declaring crypto-transaction income

July 23, 2021

The US IRS has changed the process for declaring crypto-transaction income

A new version of the tax return has changed the wording so that only taxable transactions in digital assets need to be reported in the document.

The US Internal Revenue Service (IRS) has changed the process of declaring income from cryptocurrency transactions. According to the publication, the new version of Form 1040 for 2021 has clarified the wording of the question about the existence of cryptocurrency transactions. In the draft tax return, the wording "otherwise acquire" has been changed to "otherwise dispose of" and the word "send" has been deleted.

Evan Fox, director of tax affairs at consultancy firm Marcum, believes the changes to the tax return will simplify the process of declaring cryptocurrency income. According to Fox, the changes will allow transactions not to be disclosed in cases where the holder already owns the cryptocurrency but simply transfers it to another exchange or wallet for security purposes.

Shehan Chandrasekera, head of tax strategy at CoinTracker and Forbes columnist, expressed a similar view. According to him, the tax return changes show that the IRS only wants to know about those transactions that are taxable.

2021 question doesn't have "send" and "acquire" financial interest parts. Seems like going forward IRS only wants to know about your taxable transactions. This makes more sense compared to checking "Yes" when you send or acquire a financial interest in crypto (non-taxable).

The issue of ownership of digital assets first appeared on the IRS tax return in 2018. The US IRS said back in 2014 that it planned to tax cryptocurrency transactions.

In May, the US Department of the Treasury proposed that President Joe Biden's administration impose an obligation to report details of crypto-transactions over $10,000 to the Internal Revenue Service (IRS). Authorities have called cryptocurrencies a problem that facilitates illegal activities, including tax evasion.

Stellar Wallet is an open source, decentralized protocol for digital currency to fiat money low-cost transfers which allows cross-border transactions between any pair of currencies.

About the author

Hi there, my name is Zalman Weinberg. I'm enthusiast with over 7 years of experience in cryptocurrencies and blockchain. Professional Trader providing Blockchain solutions to Startups and Enterprises. Expert in all cryptocurrency exchange APIs (BitMEX, Bittrex, Binance, Bitfinex, Kraken, Poloniex, Gdax etc.). I have also worked with multiple Forex broker APIs.

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