By Alicia Maher
After the overall evaluation of the crypto market surpassed the $2 trillion mark, many authorities and tax agencies, including the US IRS, have beamed their searchlight on this nascent industry.
The US IRS And Crypto Market
The latest newsletter issue by Quantum Economics revealed that there had been a slight change in the crypto-related section for those who have started filling their tax forms for next month. For instance, one of the newly introduced questions in the tax form reads, “did you sell, receive or exchange or perform any financial transaction related to digital currencies in the last 12 months?”
Even though this question has been introduced over the past three years, it is the first time the form asks whether a taxpayer has purchased digital currency. The question is asking whether a taxpayer has used digital currencies to settle financial transactions within the last fiscal year.
The Implication Of This Question
This question implies that the IRS wants to know whether the taxpayer should pay more in taxes since the crypto may have been more valuable, which would make it taxable. By definition, the increase in value here means making gains from the crypto’s increased price, using the crypto to pay for goods and services on the Home Depot site, the Microsoft Store, and other retailers that now support crypto payments.
Also, the increased value might mean swapping one crypto for another one that increases in value. The point is, the IRS expects that every taxpayer must report their gains or losses from their crypto activities. Also, those who have started receiving their salaries in crypto must include the value of the crypto in USD when filing their tax report.
America’s tax filing season usually lasts for four months (between late January and mid-April) every year. However, the IRS shifted the deadline for this year’s tax filing season by three days to commemorate the celebration of the emancipation day holiday, which is scheduled for April 16.
Increasing Tax Regulation Over The Crypto Market
Financial regulators worldwide continue to deploy various means to increase their oversight functions over the crypto space. But more importantly, develop and implement an acceptable tax policy for crypto earners.
Recently, the OECD (organization for economic cooperation and development) has inaugurated a committee to develop a digital asset reporting system, which will mandate crypto exchanges to disclose details of their transactions to the appropriate tax regulators.
If the OECD adopts this committee’s report, it will become binding on all its 39-member nations. You’d recall that India recently passed a crypto tax bill where crypto traders and investors, including NFT creators, are to pay a 30% tax on their profits.
The decision of the Indian authorities prompted a petition on the Charge.org website seeking signatures of Indian crypto players to force the government to reverse its decision. The latest Coinmarketcap data shows that the crypto market grew by 9.65% in the last seven days and 0.94% in the past 24 hours and is valued at $2.17 trillion.