When taxpayers filed their 2021 tax returns, there was a yes/no question on the first page of Form 1040 that read, “At any time in 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?” It may seem insignificant, but there are potential issues with whichever answer was given.
By checking “Yes,” the IRS knows to look for capital gain/loss transactions on Schedule D or for fee income on Schedule 1. If neither is reported, it can lead to questions from them. Conversely, if you checked “No,” but did have a qualifying transaction and didn’t report it, then the return was improperly filed. While it may seem innocuous, remember that you are signing the return under penalties of perjury, so you may want to reconsider any decision not to report a crypto currency transaction.
It’s situations like the above that we deal with every day. Our team is well versed in the tax law and understand the ramifications for each item that goes into your tax return. Levine, Jacobs and Company is a full service certified public accounting firm where every client receives the talent and expertise of the whole firm.
Levine Jacobs & Co., LLC
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