IRS Wants You To Declare Your Crypto Activities; What This Means for Bitcoin, Ethereum, and Snowfall Protocol Users?

The post IRS Wants You To Declare Your Crypto Activities; What This Means for Bitcoin, Ethereum, and Snowfall Protocol Users? appeared first on Coinpedia Fintech News

The latest reporting obligations published by the Internal Revenue Service (IRS) require the general public in the USA to provide details of their crypto activities, whether they are a part of the crypto world or not. As of 2021, the IRS does not use the term “virtual money”. It has been replaced by “digital assets”. Every US citizen is required by law to answer all the questions related to their crypto activities.

Answering the Questions

Individuals have to answer questions about their crypto activities in three different tax forms. These are:

• 1040 Individual Income Tax Return
• 1040-SR U.S. Tax Return for Seniors
• 1040-NR U.S. Non-resident Alien Income Tax Return

All these 3 forms have questions about digital assets and income from them. IRS requires all individuals to answer their questions with a “yes” or a “no”. All U.S. citizens are now required to answer questions about cryptocurrencies irrespective of whether they participated in any digital asset transactions or not.

The IRS also wants to know if an individual has acquired, transferred, or sold digital assets in the financial year. Individuals should also report any financial gains from their crypto activities, including mining or staking cryptocurrencies.

IRS Tracks Popular Cryptos

Privacy is vital to the crypto space. After all, it is one of the tenets of the crypto-verse. But, in the U.S., IRS has many ways to reach crypto users and make them pay their taxes.

IRS has gotten better at tracking Bitcoin for multiple criminal investigations. They can also easily freeze assets in such cases. So, those who transact in famous cryptocurrencies like Bitcoin and Ethereum should keep tabs on legal changes and calculate their tax liabilities accordingly.

It is common for the IRS to gain information about the crypto trading of U.S. citizens by filing subpoenas against companies that run those cryptocurrencies. If you fail to report a loss, gain, or any activity in the crypto market, the IRS will charge you a fine in addition to the tax levied on your income. That can get quite costly.

Snowfall Protocol (SNW) Users & IRS Reporting

Snowfall Protocol (SNW) is yet to be launched in February. However, since its presale in the latter part of 2022, it has created impressive gains for its users. This includes the continuous appreciation in the price, and passive income from staking activities. Moreover, Snowfall Protocol (SNW) is predicted to grow from 1000% to 5000%. 

However, when it comes to the new IRS ruling, Snowfall Protocol (SNW) users do not have to declare any gains from selling the tokens or staking the coin. The reason is simple. Snowfall Protocol (SNW) is based out of Europe. So, it does not come under the purview of U.S. laws. All users who buy Snowfall Protocol (SNW) outside the U.S. do not have to worry about paying taxes per the new US IRS laws.

The Snowfall Protocol (SNW) users do not have to go through the tedious process of filling out three forms declaring their “digital assets”.