The Internal Revenue Service reminded taxpayers to answer digital asset questions and report all digital asset-related income when filing their 2022 to avoid consequences from the agency.
IRS Warns Taxpayers Should Report Digital Asset Income In Filing 2022 Tax Return – Here’s Why (PHOTO: U.S. Bank)
IRS: Taxpayers Should Report Digital Asset Income In Filing 2022 Tax Return
IRS warns tax papers to answer a digital asset income when they file their 2022 federal income tax return to avoid a penalty or delay in their refunds. This information was revealed through recent updates by IRS on January 24. Moreover, filers must give a response to a new digital asset question on their 2022 federal income tax return, per the Epoch Times. The word “digital assets” has replaced “virtual currencies,” a term used in prior years.
The question, indicated at the top of Forms 1040, Individual Income Tax Return, 1040-SR, U.S. Tax Return for Seniors , and 1040-NR, US Nonresident Alien Income Tax Return, was modified this year to update terminology. Despite this, the IRS declared they put “expanded” and “clarified” instructions in the digital asset question section for simple comprehension.
What Is A Digital Asset?
A digital asset is a digital representation of value recorded on a cryptographically secured, distributed ledger. Common digital aids include:
- Convertible virtual currency and cryptocurrency
- Stablecoins
- Non-fungible tokens (NFTs)
Every taxpayer who files Form 1040, Form 1040-SR, or Form 1040-NR must check one box, answering either “Yes” or “No” to the digital asset question. All taxpayers must answer the questionnaire, not just those who engaged in a transaction involving digital assets in 2022.
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