There is a new question asked on our income tax returns about cryptocurrency. You have to mark yes if you sold, exchanged, mined or made any purchases with cryptocurrency. If you don’t report these transactions you could get audited by the IRS and face penalties. One of the issues with filing taxes on crypto is simply that it is very difficult to get your history from the digital currency exchanges that are most commonly used. Most investors will sell frequently to trigger short term capital gains for this reason too.

Key Takeaways:

• You may get audited by the IRS if you don’t report your taxable virtual currency transactions.
• Crypto currency is technically subject to a capital gains tax as long as it as exchanged or sold for a profit.
• Figuring out how much tax you owe on virtual currency is difficult because there isn’t much reporting available from the digital exchange websites/businesses.

“You need to answer yes if you sold, exchanged, mined or made purchases with digital currency.”

Read more: https://www.cnbc.com/2022/02/08/how-to-answer-the-virtual-currency-question-on-your-tax-return.html