Draft IRS Form 1040 Puts Cryptocurrency Questions Up Front

By:
Chris Gaetano
Published Date:
Aug 24, 2020
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The IRS has released a draft of its proposed new Form 1040, which, among other changes, puts more emphasis on cryptocurrency transactions, according to Accounting Today. While the IRS began asking about such transactions on the form for last year, this year's form puts the question much higher up; it is one of the first questions the form asks. Right after the blanks for name and address, the form asks, "At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?" Accounting Today noted that the question was located much further down last year. The move indicates that the IRS is following through with earlier announcements that it intends to focus particularly hard on cryptocurrencies, as many holders, due to the difficulty of tracing the owner of many digital currencies, did not report the income to the government.

Beyond questions of digital currency, the new form also places questions regarding charitable contributions on the main form, rather than on Schedule A, for those planning to take the standard deduction. Accounting Today said that the IRS made this change because the CARES Act allows for taxpayers to deduct up to $300 in contributions even if they claim only the standard deduction. The new form also splits federal income tax withholding into separate line entries for W-2, 1099 and other forms of income, rather than on a single line, which Accounting Today said could indicate an increased willingness to scrutinize gig workers and the self employed.

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