Due to the Coronavirus pandemic, taxes have been delayed by 3 months in the United States, which is incredibly unusual since tax day has always been April 15. This 3 month delay may have lulled some people into being complacent about their taxes, or even completely forgetting about their taxes, but the fact of the matter is that taxes are due on July 15 which is less than a month away.
Since taxes are due, this also means that crypto taxes are due as well. Unfortunately, crypto taxes remain incredibly arduous despite repeated calls for the Internal Revenue Service (IRS) to simplify the crypto tax code.
Cryptocurrency is taxed as ordinary income if held for less than one year, and taxed as property if held for more than a year. Either way, each crypto transaction, and its associated profits and losses, needs to be recorded individually, and this is the real hard part of crypto taxes. Any serious crypto trader would probably have to file thousands of trades in order to comply with the crypto tax code.
Beyond that, one major change this year is that this question is now on Form 1040: “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
This is a real boilerplate question, since if someone answers yes then they must meticulously file crypto taxes, and if they answer no then they could be convicted of perjury if they are found to be lying. People who use crypto exchanges, like Coinbase, should simply answer yes since all regulated exchanges are now submitting 1099’s to the IRS on behalf of all of their customers.
Another interesting change is that hard forks which airdrop new tokens, as well as airdrops themselves, are now taxed as well.
On a final note, anyone can request a tax extension until October 15, but all taxes are still due on July 15 even with the extension. The only thing the extension changes is that tax forms can be filed as late as October 15.