If you’re a freelancer who has been active in the virtual currency market over the past few years, there’s a new question on your 2019 personal tax return that you should pay special attention to: “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”
You’ll find this query on Schedule 1, “Additional Income and Adjustments to Income,” which accompanies the 2019 version of Form 1040. You are required to check the box to affirm if you have actively used virtual currency during the tax year.
The reason the IRS wants to know about crypto is pretty simple: Virtual currency transactions are coming under a higher level of scrutiny to make sure they are taxed appropriately. In addition, the IRS has released updated guidance related to hard forks and air drops of virtual currency, as well as updated cryptocurrency FAQs.
If you are trading in virtual currency or are thinking about doing so, you need to understand these basic virtual currency tax rules:
· Cryptocurrency is not treated like cash. It is treated like stocks, bonds, and other investment properties. You need to report your holdings, gains and losses on Form 8949 and