NTA Blog: TAS Tax Tip: When to check yes or no for the virtual currency question (March 29, 2022)

The National Taxpayer Advocate has made available for download their article, “TAS Tax Tip: When to check yes or no for the virtual currency question”, published on The National Taxpayer Blog. The abstract is as follows:

Even though the IRS introduced a check box related to virtual currency on Form 1040 individual tax returns a few years ago, taxpayers and tax return preparers may still be confused when this box needs to be checked ‘yes’ or ‘no’.This year’s version of the check box question asks taxpayers whether they engaged in any transaction involving virtual currency.

At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?

This question must be answered by all taxpayers, not just taxpayers who engaged in a transaction involving virtual currency. Do not leave the field blank.

The IRS provides some guidance in the Form 1040 instructions (page 17) and frequently asked questions and answers to help. Here’s some basic information to help determine which box needs to be selected.

Click here to see the National Taxpayer Advocate’s summary of “TAS Tax Tip: When to check yes or no for the virtual currency question”

Posted by Marin Larkin, Associate Editor, Wealth Strategies Journal.