The US taxation watchdog is tightening the noose around crypto investors.
IRS Wants to Know About Your Crypto Indulgences
The US Internal Revenue System (IRS) recently released drafts of its income tax forms for 2020 which particularly asks all taxpayers whether they ever bought any crypto.
In specific, the latest 1040 form asks individuals — “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
Clearly, the IRS wants to keep a tab on all US citizens’ crypto adventures to ensure they pay the correct amount of tax owed to the regulator.
In October last year, the IRS issued fresh guidelines pertaining to crypto taxation to make it easier for crypto holders to file taxes.
Of note, filing taxes on cryptocurrency holdings is a nightmare due to the lack of regulatory and legal stature of digital assets. This has, in fact, led to the emergence of a trend where several consulting firms can be observed launching consumer service that would aid people in engaging in digital currency transactions to file their taxes correctly.
In December last year, the IRS suggested three ways to stay compliant with the cumbersome and ambiguous crypto tax laws. However, in February this year, the US Government Accountability Office (GAO) argued that some aspects of the IRS crypto tax guidelines are unenforceable.
On a more recent note, earlier this year in March, the IRS invited cryptocurrency stakeholders to a crypto tax summit after declaring its intention to pursue robust virtual currency tax enforcement in 2020.
All said and done, however, there’s evidently an urgency on the tax watchdog’s part to come up with robust cryptocurrency tax guidelines as soon as possible, especially given the fact that its own officials admit that some crypto laws are “not ideal.”
Crypto Taxation In Other Parts of the World
While the IRS is still trying to come up with an easy tax architecture for the crypto affluents, taxation watchdogs in other countries across the world seem to have a clearer approach, albeit a little stern.
As reported in June, South Korea was mulling levying taxes on cryptocurrency trading profits from 2021. This, however, drew a lot of flak from the peninsular country’s economists, who feared such strict laws could stifle the crypto industry’s growth in the long run.