|If you own digital assets or crypto currency it’s important to be aware that the IRS recently released, Tax Tips on Digital Asset Reporting and Tax Requirements (Tax Tip 2023-45, April 5, 2023).
If you have received or disposed of any digital assets in 2022 you were required to check a box on Form 1040 or Form 1040-SR indicating this. According to the IRS, digital asset transactions include: the sale of digital assets, receipt of digital assets as payment for goods or services, and receipt of new digital assets as a result of mining, staking, or a hard fork.
Those with income from digital assets must report that income properly on their income tax return. Income related to gains or losses from sales, or trading of digital assets, is reported on Form 8949, and carried to Schedule D. If the transaction was a gift, you must file Form 709, and if you received any digital assets as compensation for services or disposed of any digital assets you held for sale to customers in a trade or business, you must report the income as you would report other income of the same type.
Failure to report digital asset transactions accurately can result in IRS penalties and interest. Digital asset investors need to stay informed about the tax requirements of digital assets.