Virtual currency, such as Bitcoin, continues to be a topic of interest for the IRS. Indeed, for the 2019 tax year, the IRS added for the first time a unique question to Schedule 1, Additional Income and Adjustments to Income, which asks: “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency.” After the question, the taxpayer is required to check either “yes” or “no.” Predictably, there is no “maybe” box.
Continuing with this theme, the IRS now intends to ask even more Americans the same question for the 2020 tax year. That is, the same question above will now be asked on Page 1 of the Form 1040, U.S. Individual Income Tax Return. Because more Americans file Form 1040 than Schedule 1, the IRS’ intentions are clear—it intends to continue to seek more information regarding taxpayers’ holdings and dealings in cryptocurrency.