All taxpayers filing forms 1040, 1040-SR, or 1040-NR must answer a question about digital assets; it is a yes or no question.
Taxpayers need to click the “Yes” box if they:
- Received digital assets as payment for property or services provided;
- Transferred digital assets for free (without receiving any consideration) as a bona fide gift;
- Received digital assets resulting from a reward of award;
- Received new digital assets resulting from mining, staking, and similar activities;
- Received digital assets resulting from a hard fork (a branching of a cryptocurrency’s blockchain that splits a single cryptocurrency into two);
- Disposed of digital assets in exchange for property or services;
- Disposed of a digital asset in exchange or trade for another digital asset;
- Sold a digital asset; or
- Otherwise disposed of any other financial interest in a digital asset;
Taxpayers should check the “No” box if they:
- Owned digital assets but did NOT engage in any transactions during 2022;
- Transferred digital assets from one wallet or account to another account they either own or control, and if digital assets were purchased using real currency.
Those who click the “Yes” box must report all income related to their digital asset transactions on the relevant tax forms.