The IRS reminds taxpayers that they have expanded the instructions for answering the “digital asset” question on page one of their federal tax returns. The question must be answered “yes” or “no” even if they were not engaged in any activities involving digital assets.
The link below details the expanded definition of “digital asset” and the revised question in the Form 1040 series.
Some, but not all, of the reasons to check the box yes and possibly report information on their return include:
- Received digital assets as payment for property or services provided;
- Transferred digital assets for free (without receiving any consideration) as a bona fide gift;
- Received digital assets resulting from a reward or award;
- Received new digital assets resulting from mining, staking, and similar activities;
- Received digital assets resulting from a hard fork (a branching of a cryptocurrency’s blockchain that splits a single cryptocurrency into two);
- Disposed of digital assets in exchange for property or services;
- Disposed of a digital asset in exchange or trade for another digital asset;
- Sold a digital asset; or
- Otherwise disposed of any other financial interest in a digital asset.
If you have any digital assets, we suggest checking the platform used to provide any tax reporting for preparing your 2022 tax return. For further information, please reach out to your tax preparer.
