Reporting guidelines for cryptocurrency, digital assets change under Infrastructure Bill
Although not slated to take effect until January 2024, cryptocurrency investors and other digital asset holders should be aware of new reporting requirements spelled out in the recently signed $1.2 trillion Infrastructure Investment and Jobs Act:
- Form 1099-B Reporting Requirements: Cryptocurrency “brokers,” which will mainly be exchanges, will be required to report cryptocurrency gains on a type of 1099 form. The “broker” or exchange must send a Form 1099-B to both the Internal Revenue Service (IRS) and their customer. The customer will use information from the 1099-B to calculate their preliminary gains and losses, which will then be reported on their own tax return. The broker’s Form 1099-B will not included private wallet holdings, potentially causing overstatement of gains or losses relative to the investor’s entire crypto portfolio.
- Section 6050I expansion to include digital assets: Section 6050I requires that people who receive more than $10,000 in cash and equivalents file a report with the IRS. The report includes details about who paid them, including names and Social Security numbers. Any failure to report details about those sending payments is considered a felony offense. Now, transactions involving digital assets and cryptocurrency will be required to meet this disclosure standard.
Contact a ShindelRock tax professional to ensure you are prepared for the new crypto and digital assets changes brought by the Infrastructure Bill.