Latest in Tomorrow

Image credit: Sarinya Pinngam / EyeEm via Getty Images

IRS reminds 10,000 taxpayers that cryptocurrency is subject to taxes

It's notifying taxpayers who may have failed to report their cryptocurrency earnings.
169 Shares
Share
Tweet
Share
Save

Sponsored Links

Sarinya Pinngam / EyeEm via Getty Images

By the end of August, an estimated 10,000 taxpayers will receive letters from the IRS warning them that they may owe back taxes on unreported cryptocurrency earnings. While it might not be immediately obvious, you must include cryptocurrency earnings when you file federal taxes. As with tax evasion for traditional currency, anyone convicted of evading crypto taxes could face up to five years in prison and a fine of up to $250,000.

In a press release, IRS Commissioner Chuck Rettig said:

"Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties. The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations."

The IRS considers cryptocurrency taxable just like any other property transaction. If you're paid in crypto by an employer, your earnings are subject to federal income tax withholding and payroll taxes. If you earn cryptocurrency as an independent contractor, you'll have to file a 1099. If you sell crypto, you could have to pay capital gains tax, and if you're mining, that should be reported in your gross income. While cryptocurrency may have once felt cutting edge, getting a letter from the IRS stating that you owe back taxes makes it automatically less cool.

All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you buy something through one of these links, we may earn an affiliate commission.
Comment
Comments
Share
169 Shares
Share
Tweet
Share
Save

Popular on Engadget

Engadget's 2019 Back-to-School Guide

Engadget's 2019 Back-to-School Guide

View
Terminator T-800 and The Joker are coming to 'Mortal Kombat 11'

Terminator T-800 and The Joker are coming to 'Mortal Kombat 11'

View
Microsoft contractors listened to what people told their Xbox consoles

Microsoft contractors listened to what people told their Xbox consoles

View
Tesla delays price hike for self-driving upgrade

Tesla delays price hike for self-driving upgrade

View
New wristband could predict aggressive outbursts in people with autism

New wristband could predict aggressive outbursts in people with autism

View

From around the web

Page 1Page 1ear iconeye iconFill 23text filevr