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Crypto tax regulation in the US gets ever so slightly clearer in IRS draft

Crypto tax regulation in the US gets ever so slightly clearer in IRS draft

Quick Take

1 minute read

  • Crypto regulations in the United States have been anything but clear.
  • Regulators are still looking to clean up any reporting requirements for users on crypto assets. 

Crypto regulations in the United States have been anything but clear. Regulators are still looking to clean up any reporting requirements for users on crypto assets. The second draft of form 1040 from the internal revenue service for the 2020 tax season was recently published online indicating that anyone who was engaged in any transaction related to the industry will be required to declare it.

"If, in 2020, you engaged in any transaction involving virtual currency, check the ‘Yes’ box next to the question on virtual currency on page 1 of Form 1040 or 1040-SR."

According to the IRS, by holding a digital currency in a wallet or account, or even transferring it between two wallets/accounts, this is not classed as a transaction.

As tax reporting on cryptocurrency in the US seems to be getting a little stricter, some big industry players are getting ready to invest in tax solution providers. These could help make the whole scenario of crypto tax a lot easier for retail and institutional investors.

One company that offers tax automation software for retail purposes is TaxBit.

Even though a little bit of clarity has been made when it comes to crypto regulation in the United States, there is still a long way to go.

Companies such as the San Francisco-based Ripple are looking outside of the United States to move their headquarters due to the lack of regulatory clarity in the nation. This is probably not helped by the SEC lawsuit that the company received just last month.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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