Latest ITR forms have new section for cryptocurrency income: These details will be needed when filing (2024)

FAQs

What form do I need to report cryptocurrency on taxes? ›

Reporting your crypto activity requires using Form 1040 Schedule D as your crypto tax form to reconcile your capital gains and losses and Form 8949 if necessary. You report your total capital gains or losses on your Form 1040, line 7.

Not choosing the right ITR Form: Depending on your income profile, file either ITR-2 (for individuals with capital gains) or ITR-3 (for business-related income). These forms include a section on Schedule VDA specifically for reporting crypto income.

The crypto tax question for 2022

‍“At any time during 2022, did you (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”

If you have digital asset transactions, you must report them whether or not they result in a taxable gain or loss.

June 28 (Reuters) - The U.S. Treasury Department finalized a rule on Friday requiring cryptocurrency brokers, including exchanges and payment processors, to report new information on users' sales and exchanges of digital assets to the Internal Revenue Service.

US taxpayers must report any profits or losses from trading cryptocurrency and any income earned from activities like mining or staking on tax return forms, such as Form 1040 or 8949. Not reporting can result in fines and penalties as high as $100,000 or more severe consequences, including up to five years in prison.

Salary: you would provide a recent payslip from your employer (and/or a tax statement) AND a bank statement showing your recent account balances. Your name, date, and amounts should be clearly visible.

According to the Income Tax laws, if you purchase NFTs or crypto coins in INR, no TDS would be applicable on such transactions. However, you must pay TDS if you wish to sell it back to get INR. By considering the above facts, you can be a responsible owner of VDAs in India.

Gains made from trading cryptocurrencies are taxed at a rate of 30% (plus 4% cess) according to Section 115BBH. Section 194S levies 1% Tax Deducted at Source (TDS) on the transfer of crypto assets from July 01, 2022, if the transactions exceed ₹50,000 (or even ₹10,000 in some cases) in the same financial year.

What is the income tax notice for crypto? ›

Crypto/NFT income is classified as business income if it is held for trading purposes. Gains from Cryptocurrency/NFTs and other VDAs are now reported in a separate part called Schedule - Virtual Digital Assets (VDA) on the revised Income Tax Return (ITR) forms for the fiscal year 2022–2023.

The IRS treats cryptocurrency as property, meaning that when you buy, sell or exchange it, this counts as a taxable event and typically results in either a capital gain or loss. When you earn income from cryptocurrency activities, this is taxed as ordinary income.

There is no way to legally avoid taxes when cashing out cryptocurrency. However, strategies like tax-loss harvesting can help you reduce your tax bill legally. Converting crypto to fiat currency is subject to capital gains tax. However, simply moving cryptocurrency from one wallet to another is considered non-taxable.

Crypto-specific activity that might trigger an audit includes: Failure to accurately report crypto transactions and income. Large transactions or significant gains. Inconsistencies or discrepancies.

For crypto income, on the prepare your 2023-24 return (step 4) page, select add/edit next to other income. Next to any other income, select add. In the drop down menu under type of payment, select other. For the description, write a description of your income - for example, staking rewards.

You must report income, gain, or loss from all taxable transactions involving virtual currency on your Federal income tax return for the taxable year of the transaction, regardless of the amount or whether you receive a payee statement or information return.

If you earn $600 or more in a year paid by an exchange, including Coinbase, the exchange is required to report these payments to the IRS as “other income” via IRS Form 1099-MISC (you'll also receive a copy for your tax return).

This form is typically used by cryptocurrency exchanges to report interest, referral, and staking income to the IRS. In most cases, exchanges send Form 1099-MISC when a customer has earned at least $600 of income. Form 1099-MISC does not contain information about cryptocurrency capital gains and losses.