Posted on 01/26/2023 6:38:26 PM PST by SeekAndFind
The Internal Revenue Service (IRS) issued an alert to taxpayers on Tuesday, reminding them that they must report all digital asset-related income and answer a new digital asset question on their 2022 federal income tax return or face consequences such as delayed refunds or even penalties.
The IRS said in a Jan. 24 release that a key change on 1040 forms this year is that the agency has replaced the term “virtual currency” with “digital assets,” in addition to some other modifications to the wording.
The “Yes” or “No” question, which was expanded and revised this year to update terminology, reads as follows:
“At any time during 2022, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, gift or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”
The question appears at the top of tax forms 1040, Individual Income Tax Return; 1040-SR, U.S. Tax Return for Seniors; and 1040-NR, U.S. Nonresident Alien Income Tax Return.
“All taxpayers must answer the question regardless of whether they engaged in any transactions involving digital assets,” the agency cautioned.
It is a legal requirement to accurately report all income, including income from digital assets, on federal income tax returns. Failure to do so could result in non-compliance with tax laws and possible penalties.
The IRS has provided a detailed explanation of what constitutes a digital asset, which includes such things as stablecoins, non-fungible tokens (NFTs), and cryptocurrencies.
Taxpayers need to check the “Yes” box if they:
Those who tick the “Yes” box must also report all income related to their digital asset transactions on relevant forms. For instance, an investor who sold cryptocurrency during 2022 would use Form 8949, Sales and other Dispositions of Capital Assets.
Taxpayers should check the “No” box if they merely owned digital assets but didn’t engage in any transactions involving them in 2022.
They should also tick “No” if they merely transferred digital assets from one wallet or account they own or control to another one that they own or control, and if they bought digital assets using real currency like the U.S. dollar.
The IRS has warned that many taxpayers should expect a smaller refund this tax season because of tax law changes including the expiration of pandemic-related stimulus payments that would otherwise have boosted refund balances.
“Due to tax law changes such as the elimination of the Advance Child Tax Credit and no Recovery Rebate Credit this year to claim pandemic-related stimulus payments, many taxpayers may find their refunds somewhat lower this year,” the IRS said in a press release on Jan. 23, the day the agency began tax returns for 2022 earnings.
Not all tax filers will see lower refunds as individual circumstances vary; many will see smaller checks.
The Recovery Rebate Credit was a way for millions of Americans to receive pandemic support if they did not receive their full amount via stimulus checks.
This credit was available for missing amounts from the first, second, and third round stimulus checks, and could only be claimed on 2020 and 2021 tax returns.
The stimulus checks were discontinued in December 2021 and the missing third-round amounts could only be claimed on a 2021 tax return filed in 2022.
However, people who may have missed the opportunity to claim missing third-round stimulus payments can review their 2021 tax return and consider filing an amended return.
The Child Tax Credit (CTC) for 2022 tax returns has been reduced to $2,000 per child, down from the expanded amount of $3,600 for children under 6 and $3,000 for children between 6 and 17 in 2021.
Some taxpayers may be eligible for an Additional Child Tax Credit (ACTC), which would allow them to receive up to $1,500 of the CTC as a refund on their tax return.
Also, a tax credit that working parents can use to help cover child care costs or that people with adult dependents can use for the same purpose is lower in 2022.
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No, but they might be considered fungible.
In economics, fungibility is the property of a good or a commodity whose individual units are essentially interchangeable, and each of whose parts is indistinguishable from any other part. Fungible tokens can be exchanged or replaced; for example, a $100 note can easily be exchanged for twenty $5 bills. In contrast, non-fungible tokens cannot be exchanged in the same manner.
- Wikipedia
Can you break a "50 Cents Off Your Next Purchase of Shake 'n' Bake" coupon?
Like, could you hand me two "25 Cents Off Your Next Purchase of Shake 'n' Bake" coupons in exchange?
SERIOUS QUESTION: Are "digital assets" like Bitcoin legal tender?
Are they valid for the "payment of all debts, public and private?"
Then what business does the IRS have, asking about them?
Regards,
“If anyone wants to yell at me for not paying them, do it.”
Well, for starters, those who don’t pay taxes aren’t contributing to the destruction of Syria, Libya, Serbia, and Ukraine and many other countries, along with the blowing up of gas pipelines.
Not very considerate of you.
Dictionary: In broader use, fungible can mean "interchangeable," or sometimes "readily changeable to adapt to new situations." One Shake&Bake coupon is interchangeable with any other of like amount, and yes, two 50¢ coupons have the same economic value as one $1 coupon. Moreover, when Shake&Bake introduces a new product offering the coupons are still usable (adaptable).
As to your follow-up question, the IRS has never been restricted to taxing "legal tender". Their interest extends to increases in value of any kind, such as unrealized capital gains and property appreciation. Even to "exchanges in like kind", that clearly involve nothing like legal tender (but implied changes in value can be converted to legal tender, just like Bitcoin).
( Art exemption 238 AA of the CGI )
Which is why banks report interest income to the IRS.
This new requirement refers to income, not just having assets.
Works the same for stocks.
I have a freind who hasnt filed since 2014... the year Obamacare started charging. he is wondering where to possibly start catching up. anyone in the know please contact freepmail...
Thanks...
i before e...
It's what you feel like showing the IRS every year when you pay your taxes.
One on each hand.
I wouldn't yell at you for not paying taxes. I would tell you how stupid you are for posting and bragging about it on the internet. That's just plain dumb.
No digital assets added. I have the same 10 fingers and toes I had last year.
Is there some reason we can't do both?
Read later.
No reason. Anything is better than the current tax on the “fruits of one’s labor”.
I might say, “Maybe.”
I might say, “Maybe.”
(Did the cyrpto folks send the IRS any of my information?)
Is a CAR that you won from a raffle ticket?
Is there any 'interest' generated by crypto?
filed OK
since OK
wondering NOT ok
freepmail NOT ok
Gotcher digital assets right down there, beotch!
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