Ahead of the 2022 tax year, IRS shares a tax form draft including an expanded crypto section.
The US Internal Revenue Service (IRS), an institution responsible for collecting US federal taxes and administering the main body of the federal statutory tax law, has changed its crypto terminology to include non-fungible tokens (NFTs).
According to the draft bill released by Treasury Department, the IRS changed its old terminology from “virtual currency” to “digital assets.”
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Digital assets are any digital representations of value that are recorded on a cryptographically secured distributed ledger or any similar technology. For example, digital assets include non-fungible tokens (NFTs) and virtual currencies, such as cryptocurrencies and stablecoins.
In the draft version of the 2022 IRS tax form, the authority overviews how taxpayers will account for using NFTs, cryptocurrency, or stablecoins.
In the 2021 tax form, taxpayers had to reveal whether they sold, exchanged, or received any “virtual currency.” This year’s tax form considering “digital assets,” is much longer.
The taxpayers will have to fill out the form by answering whether or not they have engaged in digital asset transactions during 2022. More specifically, taxpayers will have to indicate with “yes” or “no” answers whether they have exchanged, gifted, disposed, or sold digital assets. Moreover, citizens must reveal whether they received rewards, awards, or payments for their digital properties or services.
Although the draft outlines many categories when taxpayers have to indicate how they participated in digital asset transactions, there is a separate section when citizens are not required to do so. The draft notes:
"The following actions or transactions in 2022, alone, generally don’t require you to check “Yes”: holding a digital asset in a wallet or account, transferring a digital asset from one wallet or account you own or control to another wallet or account that you own or control, purchasing digital assets using US or other real currency, including through the use of electronic platforms such as PayPal and Venmo.”
It's worth noting that IRS posted only the draft version of the 2022 tax form.
