The IRS has made cryptocurrency (or virtual currency as the IRS calls it) a priority. The IRS specifically asked, for the first time, about “virtual currency” on Schedule 1 of the 2019 1040 tax form. In 2020 – that question was moved to page one of the 1040 return.
The early draft of 2021 IRS Tax Form 1040 includes the language “At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial of any financial interest in any virtual currency?” directly under your name and address information. So there is no getting around reporting cryptocurrency to the IRS. Remember, IRS Form 1040 is submitted under penalty of perjury!
Attorney Steven A. Leahy – the Crypto Lawyer – reviews what you need to know about cryptocurrency and your taxes.