The tax season is approaching quickly, and while no one is looking forward to tax calculations, the situation is once again hitting crypto users the hardest. Due to the fact that crypto users tend to trade their coins on different exchanges, as well as the price’s extreme volatility, calculating the taxes correctly can be quite a challenge.
This is why tax preparation service H&R Block has recently reminded users of the upcoming tax season, advising them to report their crypto dealings accurately while filing their returns. Furthermore, coin holders should know that the IRS is becoming quite interested in their crypto dealings, and it is requesting reports of crypto asset activities, in particular.
The IRS increases its focus on crypto
Recent reports say that the new tax season will also bring different tax forms, which include new questions, with the focus on digital currencies. The question that taxpayers can expect to see is
At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?
The change comes as part of the IRS’ effort to remind and motivate crypto users to report their crypto dealings accurately. Furthermore, the head tax officer of H&R Block, Kathy Pickering, stated that the Internal Revenue Service will likely be more forgiving of those who reveal their crypto dealings on their own.
As mentioned, calculating crypto taxes accurately is quite complex, and the IRS is likely to be more willing to tolerate potential mistakes, but only for those who come forward and self-report. Lastly, H&R Block pointed out that tax obligations may differ, depending on the type of crypto-related activities. Buying digital coins as an investment will not be treated the same way as mining them, or buying them for business purposes, which is something that crypto users should keep in mind.