GREENSBORO, N.C. — There's something on this year's 1040 tax form that's never been there before. It’s an entire section dedicated to Digital Assets.
The section reads: 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)? You have to answer yes or no.
What is this about? Cryptocurrency. If you bought cryptocurrency last year, if someone bought something from you and paid you in crypto, or if you were given cryptocurrency, you need to check the yes box.
“Let's say you bought cryptocurrency at its height of $60,000, but now it's at $20,000 and you're still holding on to it, there's nothing to report about it until you actually sell it. If you sell it, then it's like a stock transaction. But until then, you just check the box,” said Rodney Dodson of Liberty Tax Services.
If you did in fact sell some of your cryptocurrency,
then you will be filling out a Schedule D form and that form leads to another form, 8949.
It sounds like a lot of work, especially if you lost money on the sale, but there's actually good news with that.
“If you sold it and you lost money you'll report it as a loss on your tax return, just like you would a stock, you can write off up to $3,000,” said Dodson.
This year, it's digital assets like crypto. Next year, the form will change to include payments from third-party apps like Venmo, Zelle, and Cash App. We'll have to see how that shakes out. The IRS doesn’t want to miss any income tax.