The IRS reminds taxpayers that there is a virtual currency question at the top of Form 1040, Form 1040-SR and Form 1040-NR that asks: “At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?”

When to check “No”:

  • Holding virtual currency in their own wallet or account
  • Transferring virtual currency between their own wallets or accounts
  • Purchasing virtual currency using real currency, including purchases using real currency electronic platforms such as PayPal and Venmo

When to check “Yes”:

  • The receipt of virtual currency as payment for goods or services provided
  • The receipt or transfer of virtual currency for free that does not qualify as a bona fide gift
  • The receipt of new virtual currency from mining and staking activities
  • The receipt of virtual currency from a “hard fork”
  • An exchange of virtual currency for property, goods or services
  • An exchange/trade of virtual currency for another virtual currency
  • A sale of virtual currency
  • Any other disposition of a financial interest in virtual currency.

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