IRS will be asking about cryptocurrency transactions on 2021 returns – FOX13 News Memphis

If you’re banking on cryptocurrency, a digital way to get paid, you may have to pay real taxes on the money you earn.

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The IRS has changed the 1040 tax form for the 2021 tax year, asking if a taxpayer has either received, sold, exchanged or disposed of digital currency, Market Watch reported.

That means that if you received payment in cryptocurrency, did not receive it as a gift, or got it by mining, you may need to pay tax on it, Market Watch explained. If you moved your digital money from one account to another, or from one wallet to another, you should not have to pay taxes.

You must check a box for the crypto question, even if you didn’t have any cryptocurrency transactions in 2021.

The new tax question also applies to non-fungible tokens or NFTs, CNBC reported. The NFTs could also come with a hefty tax bill — a 31.8% tax rate on any profets.

Bitcoins and the like are taxed at a 23.8% top rate, CNBC reported.

Cryptocurrency is treated as property, CNET reported. But there is a catch. If you used real money to buy crypto, you may not have to report the purchase, but if you bought cryptocurrency with other cryptocurrencies then you have to report it, according to CNET.

If you have to pay tax on crypto, then you will need to fill out another form — Form 8949 and Schedule D of Form 1040, Market Watch reported.

For more on the tax implications of cryptocurrency, visit the IRS’s website.

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