Internal Revenue Service, Crypto, and Tax Returns for 2020

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Arbitrage trading, Indian bank and crypto, taxes

Last year,  the coronavirus pandemic altered the plans of millions of people around the world. Unfortunately, some of them are still out of work and it would take time to improve the situation. Despite all challenges, it is time to think about taxes and in this case crypto taxes.

People should keep in mind that, tax returns for 2020 are due on April 15, 2021. Moreover, people should count on a delay like last year. As a reminder, last year, the Internal Revenue Service (IRS) granted a 90-day reprieve on return filing and payments, until July 15, 2020. Importantly, the world may still be in Covid-19’s grip during the upcoming tax-filing season. However, most observers do not expect the same kind of latitude from the IRS when it comes to 2020 tax returns.

Crypto taxes and important details

It is worth mentioning that, two years ago, the Internal Revenue Service made crypto a kind of everyman’s tax issue by adding a question to everyone’s tax return and the same thing happened with 2020 tax returns. People should take into consideration that starting with the 2019 tax returns filled in 2020, taxpayers have to answer a simple question.

Let’s have a look at the question, “at any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency”. It is a yes or no question, as it does not ask for numbers or details. However, that information would go elsewhere on your tax return.

Importantly, the IRS classifies crypto as a property, any sale is going to produce either a gain or loss and a yes or no box can turn out to be pretty important. It is worth noting that, given the IRS’ track record with offshore bank accounts, it could even mean big penalties or even jail. People should pay more attention to such details.

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