In Georgia and across the United States, taxpayers may want to pay attention to two new Internal Revenue Service (IRS) tax guidelines. Watch for a new checkbox located on Form 1040. This checkbox will inquire whether the taxpayer received, sold, sent, exchanged or acquired virtual currency during 2019. The checkbox is the first item located at the top of Schedule 1. A similar question will appear on Schedule B, Part III. This question, located next to Foreign Accounts and Trusts, asks the taxpayer whether they had any holdings in a financial institution located in another country in 2019.
Regarding cryptocurrency holdings, it is interesting that some taxpayers are not required to file Schedule I. The IRS will now require taxpayers to file Schedule 1 even if they do not normally need to file this schedule. The distinguishing criteria will focus on whether the taxpayer had any involvement with cryptocurrency holdings during 2019. This may pose a problem for taxpayers who still fill out forms by hand instead of relying on tax preparation software. It is even possible that a professional tax preparation representative may neglect to ask the question.
Starting October 11, 2019, the IRS will accept comments regarding the cryptocurrency questions by sending emails to [email protected] The IRS will only accept these comments for a 30 days. Taxpayers who send emails to the IRS will not receive any official replies. Failure to check either the cryptocurrency box or the offshore interests box may result in financial penalties or even criminal prosecution.
Tax liability, especially for high-net-worth individuals, poses a serious financial issue. Whether a taxpayer has concerns about cryptocurrency sales, offshore holdings, capital gains or business income, consulting with a tax lawyer may help. Taxpayers who have concerns about their 2019 income taxes may wish to set up appointments.