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The American IRS Has Made Changes To The Tax Form Due To Cryptocurrencies

26 October 2020 17:00, UTC
The American IRS Has Made Changes To The Tax Form Due To Cryptocurrencies

The Internal Revenue Service (IRS) has announced the changes to Form 1040, which every American uses to file their federal income tax. Now right at the top of the form, below the address line, is a new yes or no question that asks if the filer received financial interest in cryptocurrency.

For a cryptocurrency to be subject to taxation, the owner must hold and control it. If a trader receives a coin and makes trades, he or she holds and controls cryptocurrencies. If the owner has a cryptocurrency in the wallet, but does not trade, sell, buy other cryptocurrencies or exchange it, he or she has no control over the coins and does not receive income. In this case, the cryptocurrency is not taxable.

There are cases when cryptocurrencies are not taxed. The transfer of cryptocurrency from one exchange to another is not taxable, purchases are also not taxable. Gifts in the form of cryptocurrency are not considered income, however, if they subsequently generate income, this income is subject to taxation. In addition, if cryptocurrency is received as part of an inheritance to satisfy the heir's right to property income, it is treated as property income and is taxed.

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