By Martha Waggoner January 26, 2024

The IRS has added a question about income from digital assets for 2023 tax returns.

All taxpayers must answer the question. If they answer “yes,” then they must report all income related to digital asset transactions, including any that were sold, exchanged, or transferred as a capital asset in 2023 or digital assets that were given as a gift. An employee who was paid with digital assets must report the value of assets as wages, and independent contractors must report digital asset payments as well.

Taxpayers, according to the IRS, can answer “no” if they did not engage in any transactions involving digital assets or if their activities were limited to holding digital assets in a wallet or account; transferring digital assets from one wallet or account they own or control to another wallet or account they own or control; or purchasing digital assets using U.S. or other real currency, including through electronic platforms.

Source: Journal of Accountancy