IRS 1040 Form Revamp Moves Crypto Question to Front Page

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  • The IRS has moved a question on cryptocurrency profits to the front page of its 1040 form
  • The question asks if any profits were made on cryptocurrency or digital assets, with ‘yes’ and ‘no’ being the only options
  • The wording and placement means crypto tax dodgers cannot unwittingly make a mistake

The Internal Revenue Service (IRS) plans to make it even harder for cryptocurrency traders to hide behind ignorance of tax rules when filing their return, after moving a question on crypto earnings to a prominent position on the front page. A proposed change to the standard 1040 form would see the question of crypto earnings rendered impossible to miss, while the wording offers little avenue for escape for those withholding earnings in an attempt to escape paying their dues.

New 1040 Form Leaves no Room for Ignorance

Last year saw the first instance of crypto earnings being specifically asked about by the IRS on the 1040 form, but the location of the question, on a part of the form that not all tax filers had to answer, meant that it could have been missed by some.

This has been eradicated however after it was revealed by the Wall Street Journal that a question pertaining to crypto ownership has been moved just below the taxpayer’s name and address on the 1040 form:

wall street jounral crypto tax

Source: Wall Street Journal

The question itself leaves little room for interpretation or semantic gymnastics, asking ‘At any time during 2020, did you sell, receive, send, exchange or otherwise acquire any financial interest in any virtual currency?’ The taxpayer must check the box “Yes” or “No”.

This leaves little room for equivocation when it comes to the IRS chasing down those they suspect of not paying up.

Allegations of Unfair Treatment

The IRS has been accused in the past of treating crypto traders unfairly, with confusing rules around crypto tax and asking traders to prove the impossible when it comes to suspected earnings from Bitcoin’s early days. Those who claim the IRS is unfairly targeting them will not therefore like the prospect of this change to the 1040 form.