• The Internal Revenue Service (IRS) has released a list of reporting obligations for US citizens regarding cryptos as the 2022 federal income tax return filing deadline approaches.
• The IRS requires taxpayers to answer all crypto-related questions, regardless of their activity, on three different tax forms.
• The IRS requires taxpayers to select “yes” if they acquire, transfer, or sell cryptos for any financial gain, including mining and staking.

The Internal Revenue Service (IRS) has issued a statement reminding all US citizens of the reporting obligations related to virtual funds or digital assets as the 2022 federal income tax filing deadline approaches. The IRS has changed the term “virtual money” to “digital assets” and they require taxpayers to answer all crypto-related questions on three different tax forms, which include the 1040 Individual Income Tax Return, the 1040-SR US Tax Return for Seniors, and the 1040-NR US Nonresident Alien Income Tax Return.

The IRS wants all taxpayers to select “yes” if they have acquired, transferred, or sold any digital assets for any financial gain, including through mining or staking. Therefore, taxpayers must record all income associated with their transactions involving digital assets in addition to marking the “yes” box. The only time a taxpayer may answer “no” is if they have been holding digital assets, have transferred assets between their wallets, or have bought crypto using fiat money.

In order to encourage taxpayers to comply with the new reporting obligations, the IRS has offered a number of incentives. They have also proposed changing the state constitution in Arizona to include taxation of digital assets as part of the 2022 ballot. The IRS has further announced that they will be launching an online portal to help taxpayers with filing their crypto taxes.

The IRS is determined to ensure that all US citizens comply with the reporting obligations related to digital assets as the 2022 federal income tax filing deadline approaches. They have provided clear instructions on how to answer the questions on the three different tax forms and have also offered incentives to encourage taxpayers to comply. They have also proposed changes to the state constitution in Arizona to include taxation of digital assets and will be launching an online portal to help taxpayers with filing their crypto taxes.