I was under the impression that the virtual currency question "At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?" only applied to cryptocurrency, but found out that it does not. I have a small side-business in an online game that allows users to exchange in-game currency for USD. How do I amend my tax return to account for this?
you do not amend to change your answer.
In fact, there's nowhere on 1040-X that you could even do that.
fanfare is correct. You don't have to amend your income tax return to change your answer from "no" to "yes" if you have cryptocurrency.
If you sold cryptocurrency, to amend your tax return, see How to amend (change or correct) a return you've already filed?
Cryptocurrency received as payment for goods and services is taxed as earned income:
Cryptocurrency sold, exchanged, spent or converted, is treated as sale of property:
Cryptocurrency received as income, and then held and sold for profit, is taxed as both:
If you were paid in cryptocurrency, you'd first pay taxes on the earned income. Then, if you later sold it for a profit, you'd pay the capital gains tax (short or long-term, depending on how long you held it). You'd also need to keep track of the value it had when you got it, and when you sold/used it.
As an example: If you were paid in cryptocurrency on Monday, and then used it to pay for something else on Friday, you'd have to know what it was worth during both days in order to calculate if you needed to report a gain or a loss. In this case, it would be like paying for something with stock instead of cash.