IRS Focus On Virtual Currency

The IRS has renewed its focus on virtual currency transactions. The front page of the 1040 for 2020 requires all individuals to answer the question: “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”.

Virtual currency for investment purposes is treated as property and taxed at short-term and long-term capital gains rates. Payment for services made in virtual currencies, such as Bitcoin, are valued at the U.S. dollar amount on the date received. These amounts are to be included on W-2 and 1099 forms.

For answers to frequently asked questions related to virtual currencies see the link to the IRS’s FAQ page: