The IRS has made an interesting change to the 2020 tax form for anyone involved in cryptocurrency.
In 2019, the question “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?” was listed at the top of Schedule 1: Additional Income and Adjustments to Income.
A regular W-2 wage earner with no other business or rental income or income adjustments would not use this form. They didn’t have to answer the question.
A Sneaky Little Tax Form Change in 2020
In 2020, the IRS has moved the question to the front of the Form 1040. Now everyone will need to answer the question, “At any time during 2020, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”
The IRS has long suspected that there are a lot of unreported crypto transactions going on. They’re tightening the web. If you report “no” to the question or skip it, you could be found guilty of perjury.
How bad is that? Let’s go right to the code: USC Section 7206(1)
“Anyone who willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter shall…be guilty of a felony and, upon conviction thereof, shall be fined not more than $5,000 or imprisoned no more than 3 years, or both, together with the costs of prosecution”
Yikes! Answer the questions correctly!
Crypto tax law is tricky! Get informed!
What You Need to Do About the IRS War On Crypto
IRS Sends Out Thousands of Letters to Crypto Investors. Here’s What to Do If You Get One.
Calculating Profit & Loss With Crypto