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IRS Updates Crypto-Related Instructions for 2022 Tax Filing – Taxes Bitcoin News
The Internal Revenue Service (IRS) has updated the crypto section of the 2022 draft instructions for tax form 1040. “For example, digital assets include non-fungible tokens (NFTs) and virtual currencies, such as cryptocurrencies and stablecoins,” the tax agency detailed.
New IRS Instructions for Tax Form 1040
The Internal Revenue Service (IRS) released its 2022 draft instructions for Tax Form 1040 last week. Form 1040 is the tax form used for filing individual tax returns in the United States. The new instructions contain several changes related to cryptocurrency.
The section titled “Virtual Currency” has been replaced with one titled “Digital Assets.” The tax authorities specified:
Digital assets are all digital representations of value recorded on a cryptographically secured distributed ledger or similar technology. For example, digital assets include non-fungible tokens (NFTs) and virtual currencies, such as cryptocurrencies and stablecoins.
NFTs and stablecoins, on the other hand, were not mentioned in the 2021 instructions for tax form 1040.
The instructions explain that taxpayers must check the “Yes” box next to the question about digital assets on page 1 of the 1040 tax form if at any time during 2022 they “received (as a reward, reward, or payment for property or services) ) » or “sold, exchanged, gifted or otherwise disposed of a digital asset (or economic interest in a digital asset).”
The 1040 draft tax form for the year 2022 was released in August.
Matt Metras, a registered agent and cryptocurrency tax specialist at MDM Financial Services in Rochester, New York, was quoted by CNBC as saying on Monday:
I think it’s a good change. People who trade things like NFTs wouldn’t think of it as a virtual currency.
He added that the IRS’s “broader language” could include new categories, such as taxpayers who receive digital assets from “gaming for profit.” Metras noted, “The IRS is always going to be behind the eight ball because they just can’t keep up with how fast the crypto space is changing.”
Miles Fuller, head of government solutions at Taxbit and former senior advisor in the Office of Chief Counsel at the IRS, was quoted by Bloomberg as saying:
Tax authorities are increasing by combining their terminology around this digital asset concept.
“So that means that more likely than not in the near future, we’re going to see these rules come out and the IRS continue to move forward with some sort of implementation of a regulatory regime,” he said. “Probably sooner rather than later.”
What do you think of the IRS’s revised crypto-related instructions? Let us know in the comments section below.
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