IRS reminds taxpayers of crypto income reporting ahead of 2022 filing
in the present
The IRS’s recent recommendation to check “Yes” to the question of whether taxpayers have received, earned, transferred, or sold any “virtual currency” during the tax year has been a long time coming. Cryptocurrency, a digital asset that is secured by cryptography and decentralized across a distributed ledger, has been a part of the tech landscape since the turn of the century.
However, the state of crypto in the present is vastly different than it was in the early days. The most obvious difference is the sheer amount of money that has been invested in cryptocurrency, as well as the number of people that are involved in the industry. The IRS’s recommendation to check “Yes” to the question of whether taxpayers have received, earned, transferred, or sold any virtual currency during the tax year is a reflection of the fact that cryptocurrency is no longer a fringe technology, but rather a legitimate asset class that is gaining traction in the mainstream.
The IRS’s recommendation to check “Yes” boils down to receiving, earning, transferring or selling cryptocurrencies for any monetary benefit, including mining and staking. Mining is the process of creating new blocks on the blockchain, while staking is the process of locking up coins in a wallet and earning rewards for doing so. Both of these activities can be highly lucrative, and the IRS’s recommendation is a reflection of this fact.
It is important to note that the IRS’s recommendation to check “Yes” is not a blanket endorsement of the cryptocurrency industry. Rather, it is an acknowledgement that cryptocurrency is a legitimate asset class that should be taken into account when filing taxes. The IRS’s recommendation is a reminder that cryptocurrency should be treated like any other asset, and that taxes should be paid on any gains made from cryptocurrency activities.
In conclusion, the IRS’s recommendation to check “Yes” to the question of whether taxpayers have received, earned, transferred, or sold any virtual currency during the tax year is a reflection of the fact that cryptocurrency is no longer a fringe technology, but rather a legitimate asset class that is gaining traction in the mainstream. It is important to note that the IRS’s recommendation is not a blanket endorsement of the cryptocurrency industry, but rather an acknowledgement that cryptocurrency should be taken into account when filing taxes.
