Tax experts share what you need to know about cryptocurrency – 1011now

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LINCOLN, Neb. (KOLN) – As tax season approaches, accountants are hearing questions ranging from cryptocurrency to stimulus money.

With the growing popularity of cryptocurrency, tax preparers said there are some things to note when filing your taxes.

Kay Maresh, assistant professor of accounting practice at UNL, said cryptocurrency is not treated like dollar bills or cash, but as an asset.

“Sometimes people don’t realize they have to report cryptocurrency-related income,” Maresh said. “There’s actually a question on your Form 1040 on the first page, just below your name, address, basic information, and asks if you’ve had any cryptocurrency transactions for the year.”

Since crypto values ​​are constantly changing, people need to know how much it is worth when crypto is bought and when it is spent or sold.

“It goes up and down a lot, so record keeping is going to be very important,” Maresh said.

If someone received crypto as a gift, they will want to report it. Maresh said that since this is treated as receiving property and could result in income, to gather all the records you have.

“Let’s say I bought a cryptocurrency for $10, $10 cash, then I buy a pizza a month later, so it’s worth $15,” Maresh said. “I actually have a gain, the difference between the $10 I paid for the cryptocurrency and the value I received when I have it.”

Megan Brunken, president of Lintel Financial Services, said there were also other challenges this year when filing.

“The child tax credit is one thing, along with the advanced child tax credits that were paid out last year,” Brunken said. “An issue we’ve heard of, the IRS sends a letter to taxpayers to show the amount of credits they received, and some reports indicate that these don’t match what people actually received.”

Brunken said there are also new rules regarding payment processors.

“Payment processors, such as Venmo or Square, are required to report certain types of transactions they paid through the processing system for more than $600,” Brunken said. “But that doesn’t change the type of taxable income. If you send money to your friends on Venmo, it shouldn’t be a taxable transaction. If it is a business or services, this type of income could be taxable.

This year’s tax deadline is Monday, April 18. Unlike previous years, there should be no extension.

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