The U.S. Treasury Department is proposing new regulations for reporting taxes for cryptocurrency exchanges and traders. The rules, which would take effect in 2026 for the 2025 tax year, are aimed at ensuring crypto investors pay their fair share of taxes when digital assets are sold and simplifying tax liability for people who want to report their transactions correctly.
Cryptocurrency exchanges are on IRS radar, according to CNBC. Detailed transaction reports are required by a new Treasury proposal.
The US Treasury Department has recently published a proposed rule requiring cryptocurrency brokers, including exchanges and payment processors, to report user information regarding sales and exchanges of digital assets to the Internal Revenue Service (IRS).
The move is part of a larger push by Congress and regulatory agencies to combat tax avoidance in the cryptocurrency industry. The new rule seeks to make tax reporting for cryptocurrency users simpler while imposing the same information reporting requirements on brokers of digital assets as they do on brokers in conventional financial markets.
The proposed rule introduces a new tax reporting form called Form 1099-DA, which would assist taxpayers in determining their tax liabilities. The form intends to reduce the “complexities” involved with computing gains by giving thorough information on users’ cryptocurrency transactions.
Per the report, the US Treasury Department believes that this streamlined approach will help individuals meet their tax obligations more efficiently.
According to the proposed rule, a “broker” would include centralized and decentralized cryptocurrency trading platforms, cryptocurrency payment processors, and particular online wallets that store digital assets. This strategy makes sure that a wide range of organizations that facilitate Bitcoin transactions are subject to the reporting obligations.
The rule would cover popular cryptocurrencies such as:
The proposed rule expands reporting requirements for cash transactions exceeding $10,000 to digital assets in addition to aligning reporting requirements for cryptocurrency brokers with those for brokers in traditional financial markets, such as stocks and bonds.
The Biden administration claims that these steps are intended to increase openness and lessen the possibility of tax evasion inside the ecosystem of digital assets.
The proposed rule results from the $1 trillion Infrastructure Investment and Jobs Act passed in 2021, which aimed to bolster tax reporting requirements for digital asset brokers.
The legislation mandated the IRS to define qualifying crypto brokers and provide forms and instructions for reporting. It was estimated that these new rules could generate approximately $28 billion in additional tax revenue over the next decade.
If implemented, the proposed rule would become effective for brokers starting from 2025, for the subsequent 2026 tax filing season. The Treasury Department and the IRS are currently soliciting feedback on the proposal until October 30 and have scheduled public hearings on November 7-8 to gather additional stakeholder input.
We, the founders of Americans Overseas, were born in the Netherlands and obtained our American nationality through our (American) mother.
When we heard about the US tax system for the first time around 2013, we were in total disbelief (it can’t be true!), anger (how can they do this?), fear (am I going to get fines or pick up other problems?), and panic (what should I do?). It is (unfortunately) true that there is an additional American tax levy. But there’s no information from local government, and when approached, the consulate referred us to the IRS, and the IRS was impenetrable.
That’s why we started this initiative to help people from all over the world by providing proper information about the US tax system to avoid unnecessary panic, and offering help free of obligation and free of charge. If needed, we have a network of affordable professionals (accountants) who can help you with your bitcoin tax obligations.
Understanding the US tax system, the obligations, and all the additional terms can be difficult. Especially if one lives outside of America. Is your question not answered? Contact us.
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