The US IRS Reminds Taxpayers to Report all Crypto-Related Income
The US Internal Revenue Service (IRS) has issued a reminder to all taxpayers to report any income related to cryptocurrencies. The IRS has included a digital asset question on the 2023 tax return Form 1040, which asks taxpayers to report cryptos received in 2023 as a reward, award, or payment for property or services.
Who Should Report?
Citizens who have received cryptos as a reward, through mining and staking, or via a hard fork must answer ‘yes’ to the question. Additionally, those who disposed of cryptos in exchange for property, services, or sold any should also report it. Taxpayers must also report all income related to their crypto transactions, including digital assets held as capital assets and those sold, transferred, or exchanged during 2023.
“If an employee was paid with digital assets, they must report the value of assets received as wages. Similarly, if they worked as an independent contractor and were paid with digital assets, they must report that income.”
On the other hand, taxpayers who only owned cryptos in 2023 can check ‘no’ to the question if they did not engage in any transactions involving digital assets during the year. Transferring cryptos between wallets owned by the same taxpayer does not need to be reported. These tax reporting requirements apply to cryptocurrencies, stablecoins, altcoins, and non-fungible tokens (NFTs).
In a separate announcement this month, the IRS mandated businesses to report receiving cash or digital assets worth more than $10,000 within 15 days of the transaction. However, businesses do not need to report the receipt of digital assets in the same way as cash until regulations are issued.
The rules have faced criticism for being vague and difficult to comply with, as many crypto users find the reporting requirements tricky.
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