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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