For the past few years, taxpayers have been required to report income from digital assets, so you need to know what to do if your clients have income from those assets and be able to explain what could happen if they fail to report it.
Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.
Q: Do clients who only buy crypto receive rewards?
A: Typically, rewards are earned from staking. Simply purchasing crypto does not generate rewards.
Q: How do we know if a client received an airdrop? Do they get a special form?
A: No, there is no specific form that a taxpayer receives when they get an airdrop.
Q: Is there any special questionnaire for digital currency?
A: It is recommended to add additional questions to your client questionnaire or intake form for clients involved in digital asset activities.
Q: Can we rely on statements from Robinhood or Schwab?
A: It is best practice to verify the transactions independently. While statements are helpful, you should still confirm the information.
To learn more about digital assets, you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial.
About National Association of Tax ProfessionalsThe National Association of Tax Professionals (NATP) is the largest association dedicated to equipping tax professionals with the resources, connections and education they need to provide the highest level of service to their clients. NATP is comprised of over 23,000 leading tax professionals who believe in a superior standard of ethics and exemplify professional excellence. Members rely on NATP to deliver professional connections, content expertise and advocacy that provides them with the support they need to best serve their clients. The organization welcomes all tax professionals in their quest to continually meet the needs of the public, no matter where they are in their careers.
The NATP headquarters is located in Appleton, WI. To learn more, visit www.natptax.com.
Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing.