What to know about taxes and cryptocurrency
LEXINGTON, Ky. (WKYT) – Tax season is currently in full swing. Recently there has been a lot of news surrounding cryptocurrency. That leads us to wonder – what do we need to know when it comes to taxes on cryptocurrency. Fiduciary financial advisor Josh Smith of Strategic Wealth Designers joined us on the newscast to discuss. Cryptocurrency is taxable.
“Cryptocurrency is taxed as property, rather than currency,” Smith says. “The amount of time you held the cryptocurrency will determine the taxes. If it was longer than a year, it will be taxed like capital gains or loss. If it is was less than a year, it will be taxed as income.”
On the 1040 form, there is a question that asks, “At any time in 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”. If you exchanged types of cryptocurrency or purchased something with cryptocurrency, you will have to answer “yes” to the question.
“Operation Hidden Treasure is a new IRS program designed to search for unreported crypto-related income,” Smith says. “This will help diminish tax evasion related to cryptocurrency., They will be looking at transactions that fall just below reporting requirements that can be used to hide funds.”
Utilizing a tax professional will help ensure you report cryptocurrency-related activity properly on your taxes. To see additional stories surrounding business and economic news for the Lexington area, visit https://WKYT.com/MoneyMatters and if you have a question for Josh send an email to firstname.lastname@example.org.
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