In light of the leading cryptocurrency Bitcoin (BTC) reaching new levels, some experts have formulated cryptocurrency tax rules that they believe will be beneficial to investors, especially those who plan to delve into the crypto space in this current bull market.
The IRS requires cryptocurrency tax reports
Bitcoin went as Up to $73,000 This week, a move sparked by massive demand for spot bitcoin ETFs.
The price marks a new all-time high (ATH) for the leading digital asset. In the past 24 hours, the price of Bitcoin has risen It fell to $67,947.01 But the coin is still up more than 50% year to date.
Given how far Bitcoin has risen so far in three months, along with growing investor interest in cryptocurrencies, tax experts warn that the Internal Revenue Service (IRS) may be preparing for some scrutiny. These professionals' speculations are not far-fetched considering that the IRS Issued new rules for tax reporting For the crypto industry in January.
The tax agency will likely be interested in enhancing digital asset servicing, reporting, compliance, and enforcement programs. Hence the necessity of providing investors with relevant information. During the 2019 tax year, the IRS retrieved cryptocurrency data by issuing a form with different versions of yes or no questions. In 2023, some questions related to digital assets were added to the first page of Form 1040.
According to Matt Mitras, owner of MDM Financial Services, a large number of cryptocurrency investors are not aware that the “digital assets” section, which includes cryptocurrencies, stablecoins, non-fungible tokens (NFTs), and others, applies to them.
To make the conversation more complex, it does not include digital asset questions Spot Bitcoin ETFs Or even Bitcoin futures ETFs.
Answer questions on the tax form
The following entities are expected to answer “yes” to questions asked by the IRS on Form 1040: Those who sold cryptocurrencies in 2023, trading one currency for another; Or receive digital currency as payment, reward or prize. Those who acquired cryptocurrencies using US dollars and still hold the asset can answer “no” to the questions.
Those who answer “no” but have profits or income in the cryptocurrency space will be charged with showing “willfulness” to intentionally violate the law, according to the explanation provided by Andrew Gordon, a tax attorney, certified public accountant and president of the Gordon Law Group.
Cryptocurrencies held for more than a year are eligible for long-term capital gains of 0%, 15% or 20% but still depend on the investor's taxable income. However, short-term capital gains apply to assets owned for only one year or less.
Cryptocurrency investors will also likely get Form 1099-MISC for rewards or income, and Form 1099-B for transactions. It is worth noting that investors may not obtain any form of reliance on the stock exchange.
The content provided may include the personal opinion of the author and is subject to the market situation. Conduct market research before investing in cryptocurrencies. The author or publication does not accept any responsibility for your personal financial loss.
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