With tax season almost here, tax preparation service H&R Block is advising its customers to accurately report their crypto dealings when they file their returns. As Yahoo Finance reports, those customers should be aware that the IRS is explicitly asking about crypto asset activities for the first time.
This year’s tax forms include a new question that asks, “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
The addition of that question is part of the agency’s increased effort to motivate cryptocurrency users to properly report their activities for tax purposes. According to H&R Block’s head tax officer, Kathy Pickering, the IRS is likely to be more forgiving of taxpayers who voluntarily disclose their cryptocurrency dealings:
“The IRS is looking for people to self-report. They're looking for you to come forward, and they'll be more lenient, even if you don't get it right, if you're disclosing.”
The company also noted that tax obligations for cryptocurrency may differ, based on the type of activities. For example, a purchase of cryptocurrency as an investment will be treated differently than cryptocurrency that is mined or purchased for business purposes.