The IRS surprised many crypto taxpayers by forcing them to declare crypto purchases and transactions. According to Mike Greenwald, a partner at Friedman LLP, this requirement surprised new crypto holders the most.
He continued,
“It requires a conversation that clients weren’t expecting to have. They don’t think about digital currencies the same way the IRS does. “
This announcement comes as the IRS continues to investigate the best way to tax the cryptocurrency business. For example, the agency is staunchly opposed to taxing Proof-of-Stake (PoS) mining payments as income.
However, in 2019, Joshua Jarrett filed a lawsuit against the IRS, claiming that the awards should be deemed freshly formed property and should not be taxed until he sells them. Jarett also requested a refund, which the IRS initially refused, until the case looked to be losing steam.
After the agency agreed to release the refund, Jarett objected, claiming that receiving the return would not insulate him from future taxation. By denying the refund, he left the case open in the hope that the court would require the IRS to provide unambiguous advice on the subject.
Session of taxation 2022
The 2022 tax filing session ended without any major incident. For the first-time in three years, the Internal Revenue Service (IRS) will be able to meet the April 18 deadline. Despite the COVID-19 pandemic’s persisting challenges, the IRS was able to handle millions of individual returns.
IRS officials have already cautioned taxpayers to brace themselves for difficult and frustrating encounters they might face due to delays and customer-service shortages.
Mark Jaeger, VP of Tax Operations at tax-preparation software provider TaxAct, commented on what has been a fairly smooth tax season.
“For most taxpayers who have fairly simple taxes, and who e-file and choose direct deposit, that process — for the most part — has been very smooth.”
Filing returns for day-trading crypto holders who use platforms like Robinhood, on the other hand, proved difficult. Nicole Rosen, a tax preparer in Washington, stated that she has seen a significant increase in the number of clients utilising services like Robinhood to purchase and sell stock.
According to her, trading stocks necessitates the completion of additional papers, which complicates the tax filing procedure. Rosen stated that the time required to complete such returns is around four hours, whereas routine filings take approximately two hours.
Read more:
- No tax unrealized gains from crypto staking or mining digital assets: US
- Cryptocurrency firms are using low-income zones as tax havens: Ron Wyden
