US Treasury finalizes crypto rules to prevent tax evasion
While people who own and sell cryptocurrency have always had to pay taxes on their earnings, a new rule finalized by the US Treasury Department can ensure that they're paying the proper amount on their sales. The new rule will require cryptocurrency platforms like exchanges and payment processors to report their users' transactions to the Internal Revenue Service. According to The Wall Street Journal, authorities are hoping that the measure can deter tax evasion, seeing as the IRS would know exactly how much a taxpayer owes.
At the same time, the rule will make it much easier for people for declare their earnings because their brokers will now have to provide them with a 1099 form. The IRS released a draft form of 1099-DA (Digital Asset Proceeds From Broker Transaction) made especially to track crypto transactions last year and will make the final version available soon. To note, the rule sets a threshold of $10,000 to report on transactions involving stablecoin, which are cryptocurrencies that track fiat money like the US dollar.
"[I]nvestors in digital assets and the IRS will have better access to the documentation they need to easily file and review tax returns," Aviva Aron-Dine, the Treasury's acting assistant secretary for tax policy, said in a statement. By implementing the law's reporting requirements, these final regulations will help taxpayers more easily pay taxes owed under current law, while reducing tax evasion by wealthy investors."
The new rule will only apply to platforms that take possession of digital assets, such as Coinbase or Binance. It doesn't cover decentralized ones, which will have to comply with a separate rule that's expected to be finalized later this year. Brokers will have to start reporting sales proceeds on digital assets in 2026 for all transactions accomplished in 2025, which means crypto traders are still on their own for 2024.
This article originally appeared on Engadget at https://www.engadget.com/us-treasury-finalizes-crypto-rules-to-prevent-tax-evasion-143051676.html?src=rss