Investing in virtual currency or cryptocurrency has caught the attention of the Internal Revenue Service (IRS). Many have invested into virtual currency such as Bitcoin, Litecoin, Dogecoin, or a coin of some sort. What are the tax consequences of buying and selling virtual currency? Direction from the IRS on how to treat virtual currency on your tax return is still unclear. However, the IRS is fiercely committed to have taxpayers report their cryptocurrency gains on their tax return. For 2020 there was a crypto question on the front of the tax return. How is a taxpayer to answer this question? To answer this question, Marcelino Dodge, EA and Amy Wall, EA discuss the importance for taxpayers of understanding how cryptocurrency activity affects their tax return and their potential tax liability.
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