Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
Kiki
Level 4

Yes or No Question for virtual currency transaction for 2021

I purchased ATOM with US Dollar $ .  I didn't sell, just holding but it seems I received rewards by staking.

 

*  My answer to the IRS question is still " NO " , right?

 

*  Do I have to report the rewards I received as income?  If so, where should I report?

 

Thank you so much!

6 Replies
Mike9241
Level 15

Yes or No Question for virtual currency transaction for 2021

How is staking taxed? 

The IRS has not issued explicit guidance on how staking is taxed. However, most tax experts agree that rewards will be taxed as income at the time of the receipt based on previous IRS guidance on mining taxes

this would go on schedule 1 line 8Z

NCperson
Level 15

Yes or No Question for virtual currency transaction for 2021

@Kiki  if ATOM is a virtual currency, your answer to the question is 'yes'.

 

the question asks if you had a transaction - and a 'transaction' is a "buy' or a 'sell'.  

 

you state your PURCHASED ATOM, so that is a transaction. 

Kiki
Level 4

Yes or No Question for virtual currency transaction for 2021

Thank you for your reply.  So, should I answer YES?

I am still confused.  Below is what the IRS says in Frequently asked Question.  I would appreciate any advice. I just don't want to make any mistake that may lead to so much headache later.

 

Q5(a). The 2021 Form 1040 asks whether at any time during 2021, I received, sold, exchanged, or othe...

A5(a). If your only transactions involving virtual currency during 2021 were purchases of virtual currency with real currency, you are not required to answer “yes” to the Form 1040 question, and should, instead, check the “no” box.

Critter-3
Level 15

Yes or No Question for virtual currency transaction for 2021

If you only bought crypto in 2021   then you will  answer NO for 2021  ... last year the 2020  question was worded differently ...

 

crypto 2020 .jpgcrypto 2021 question.jpg

 

 

NCperson
Level 15

Yes or No Question for virtual currency transaction for 2021

@Critter-3 and the language in the 2022 draft changes it again.....

 

https://www.irs.gov/pub/irs-dft/f1040--dft.pdf

 

"(b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?"

Critter-3
Level 15

Yes or No Question for virtual currency transaction for 2021

Of course ... they are still trying to figure out this crypto situation ...

 

crypto 2022 draft .jpg

Privacy Settings
v