New IRS Requirement Now Applies: ‘All Taxpayers Must Answer the Question’

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The Internal Revenue Service has issued a reminder to taxpayers, notifying them that when they file their taxes for 2022, they must report all their digital assets.

In a Jan. 24 update, the IRS instructed taxpayers to “again answer a digital asset question and report all digital asset-related income when they file their 2022 federal income tax return.”

“The question, which appears at the top of Forms 1040, Individual Income Tax Return; 1040-SR, U.S. Tax Return for Seniors; and 1040-NR, U.S. Nonresident Alien Income Tax Return, was revised this year to update terminology,” the government agency said.

They noted that the term “virtual currencies,” used on tax forms in 2021, has since been changed to “digital assets.”

The IRS also clarified the definition of a “digital asset,” which they noted “is a digital representation of value which is recorded on a cryptographically secured, distributed ledger.”

Digital assets are treated as property to the IRS and are not considered real currency, the agency said on its website.

Common digital assets listed by the IRS include, but are not limited to — convertible virtual currency and cryptocurrency, stablecoins, and non-fungible tokens (also known as NFTs).

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