If you're cashing in some of your Bitcoin this year, the IRS wants to know about it.
On Monday, the cryptocurrency's value hit new heights, surging beyond $19,800 for a unit of Bitcoin. The asset's appreciation has skyrocketed this year, rising by 160% in 2020.
Understand that if you want to take a few of those holdings off the table, you'll need to share that information when you file your individual income tax return next spring.
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In fact, the IRS gets right to the point, asking on the first page of the income tax return, or Form 1040, "At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?"
You'll have to check yes or no.
"The first thing with cryptocurrency is that, if you have crypto transactions, you'll need to report them," said Andy Phillips, director of the Tax Institute at H&R Block.
"The question is front and center — the first thing that they touch on Form 1040," he said.
People who transacted with virtual currency aren't the only ones who'll be checking the yes box on their 1040 next year.
If you received any crypto for free, you're still expected to check yes on the front of your tax return, according to newly released draft instructions from the IRS.
Exchanged some virtual currency for goods and services or for other property — including different cryptocurrenc...