Well, that’s a relief! Things are gradually falling into place in the world of cryptocurrency, and IRS is also doing its part to streamline things bit by bit.
The Internal Revenue Service of the United States government, that is.
Back in the wild days of last decade, there used to be a fair amount of confusion as to how cryptocurrency purchases were taxed, how they were to be reported. Even buying them used to be quite a task, let along penning things down for the taxman.
Thankfully, things are a bit simpler now.
The newly updated IRS FAQs on cryptocurrency state that crypto purchases made in fiat currencies are not subject to any type of IRS tax reporting. Meaning, if you purchase a digital coin using US dollars and held it for a year, you will not be required to check yes on the front of Form 1040.
You can say no.
Prior to this guidance update from the revenue service, taxpayers were confused whether purchasing cryptocurrency in USD would require them to check yes on the virtual currency question.
This added guidance provides more clarity to taxpayers going forward. Additionally, those of you focused on privacy should appreciate the fact that you will not have to disclose your involvement with cryptocurrency to the IRS needlessly.
Unless, of course, if you used another cryptocurrency to purchase a cryptocurrency. As in, buying Ether using your Bitcoin. In this case you will need to answer yes.
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