While filing my return I was asked if I had "acquired" any "digital currency" during 2020. What are the requirements if I only bought and held (and still hold) crypto?

[williamkirton]

A section in TurboTax's return filing program seemed to indicate there was nothing to report in this situation. However, there is a box checked on my return itself that indicates to the IRS that I acquired digital currency in 2020. Is there nothing else I need to do? Does having that box checked on the return trigger something?

[AnnetteB6]

If you have only bought and held cryptocurrency, but not sold, traded, transferred it from one currency to another, or used it in a purchase, then there is nothing else to report on your 2020 tax return. 

The checked box is the only thing that will be reported on your 2020 return.  There is no information available about how the IRS is using this information.

[mw104]

I am running into this exact same issue for my 2021 tax returns.  In 2021, I simply bought and held cryptocurrency (i.e., no sales or other transactions).  It is unclear to me as to whether I should answer "Yes" or "No" to the question: "Did you acquire, sell, exchange, or dispose of any virtual currency in 2021?"

TurboTax's description states that a transaction is defined as any of the following:

"- Receipt or transfer of virtual currency for free
- An exchange of virtual currency for goods or services
- A sale of virtual currency
- An exchange of virtual currency for other property (including for another virtual currency)"

This description does no appear to include only the purchase of virtual currency (it seems to only include receipt/transfer of the currency "for free").  Any advice on how to handle this?  I don't want to answer "Yes", if that would mean that the IRS would expect to then see that I had sold/exchanged virtual currency in my income.

[FangxiaL]

Per IRS 2021 1040 Instructions:

A transaction involving virtual currency does not include the holding of virtual currency in a wallet or account, or the transfer of virtual currency from one wallet or account you own or control to another that you own or control. If your only transactions involving virtual currency during 2021 were purchases of virtual currency for real currency, including the use of real currency electronic platforms such as PayPal and Venmo, you are not required to check the “Yes” box next to the virtual currency question.

For more details, see Page 17 of 2021 1040 Instructions

@mw104

[ON41]

I inadvertently  checked "yes" on virtual currency box and cannot remove or correct it

Please advise how to without re=entering entire tax info

[LenaH]

To edit your answer for virtual currency, please follow the instructions below:

1. Open your return.
2. Click on Federal on the left-hand side.
3. Click Income & Expenses at the top of the page.
4. Scroll down and click Wrap up Income.
5. Continue through the pages.
6. Answer no to the screen titled, Did you acquire, sell, or exchange any virtual currency in 2021?

@ON41