IRVINE, Calif., Oct. 20, 2020 /PRNewswire/ -- Page one of the 2020 Form 1040 will query taxpayer's whether they have engaged in virtual currency transactions. As a part of the 2019 Form 1040, a similar question made its way onto the Form 1040's Schedule 1. Shifting the question concerning virtual currency to the first page signals that the IRS is stepping up its compliance enforcement around the disposition of cryptocurrencies such as bitcoin and Ethereum. If you have traded in cryptocurrency but have failed to report disposition gains to the IRS and included such an amount into your gross income, you should contact an experienced virtual currency tax attorney to determine the best way to come into compliance.
The IRS recently posted a preview of the Form 1040 for the 2020 tax year on its website. The proposed virtual currency question is the first substantive tax inquiry that the form makes, immediately following the taxpayer's identifying information. Specifically, the question asks whether the taxpayer has "At any time during 2020" "receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?".
This inquiry is intentionally broad to capture any type of transaction dealing with virtual currency. It is important to note that not all the events listed in the virtual currency return question above are taxable events. If you have large amounts of unreported taxable income from Cryptocurrency you should consider a domestic or offshore voluntary disclosure.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-reported taxable cryptocurrency gains coupled with affirmative evasion of payment) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
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Contact: Dave Klasing Esq. M.S.-Tax CPA, [email protected]
SOURCE Tax Law Offices of David W. Klasing, PC