It's Official: Crypto on Front Page of US Tax Return

Back in August, the IRS released a draft of Form 1040—its individual income tax return—for the tax year 2020, which moved a crucial question about cryptocurrency right to the top of the first page. And with the release of the 2020 Form 1040 on the IRS’s website, that change has been made official.

There was no announcement, but cached versions of the IRS’s Form 1040 landing page show that the site was directing visitors to the 2019 version of the form as recently as December 10.

When US taxpayers filing as individuals confront their 2020 income taxes, they’ll now be asked, “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”

The change marks a significant update from last year’s individual income tax form, which only included the crypto question on Schedule 1, a 1040 supplement that taxpayers have to request separately. This year, though, all US taxpayers must disclose their crypto transactions.

Shehan Chandrasekara, a tax expert at the software company CoinTracker, told Decrypt that the new placement of the question “shows how seriously the IRS is looking into the crypto tax reporting issues going forward.”

Conveniently for long-term crypto holders, simply hanging onto your crypto doesn’t actually count as “receiv[ing], sell[ing], send[ing], exchang[ing], or otherwise acquir[ing” virtual currency, according to IRS guidelines.

New IRS Form Clarifies How to File Taxes on Crypto “Transactions”

In the latest draft of its mandatory form for personal income tax, the United States Internal Revenue Service has clarified crucial language about which cryptocurrency holdings and transactions need to be disclosed, and which do not. According to the new Form 1040 draft, which the IRS released on Friday, if you only held crypto, but did not trade it, you can safely check the “no” box next to the form’s primary crypto question: At any time during 2020, did you receive, sell, send, exchange, or ot...

A revised draft of Form 1040, released in October, contained explanatory language about what might be sufficient reason for taxpayers to check the “yes” box: examples included “a sale of virtual currency,” and “the receipt or transfer of virtual currency for free (without providing any consideration), including from an air-drop or hard fork.”