Expansion of Crypto Question on Income Tax Form Adds Clarity
Taxpayers dealing in crypto will need to track their digital assets more closely and now have some clarity on what the IRS wants to know. The agency expanded the crypto question on the draft Form 1040.
The update added wording to the form being prepared for the 2023 filing season to further specify that taxpayers should report if they received digital assets as a “reward, award or compensation.” This question is to determine if something of value was received that should be reported as taxable income.
The law has not changed, but the question is an attempt to raise awareness for taxpayers to closely track what they have received. Further guidance is expected to be provided in the future as the IRS tries to navigate the taxation of cryptocurrency.