irs-reminds-taxpayers-to-report-informal-income,-virtual-currency-transactions,-and-foreign-source-income-and-assets

The Internal Revenue Service (IRS) announced on its website that taxpayers must inform their reports and possible tax obligations if they have income from:

– Work in the informal economy
– Carry out virtual currency transactions
– Earn income from a foreign source
– Own certain foreign assets

To understand and To comply with these requirements, taxpayers can consult the information available on IRS.gov and the instructions in the Form 1040.

The IRS explains that gig economy earnings are taxable and must be reported on the tax returns. The collaborative economy is an activity in which people earn income by providing work, services or goods on demand.

Often these people work through a digital platform such as an app or a website . In this case, taxpayers must report the income obtained from the informal economy in a tax return, even if the income is:

– From part-time, temporary or complementary work
– Not reported on an information return form, such as a Form 1099-K, 1099-MISC , – W-2 or other income statement
– Paid in any form, including cash, property, goods, or virtual currency

For more information see HERE .

The IRS reminds taxpayers that if they received any virtual currency as compensation for services or disposed of any cryptocurrency they held for sale to customers in a trade or business, they should report the income as they would other income of the same type (for example, W-2 wages on Form 519 or 1040-SR, line 1, or inventory or services from Schedule C on Schedule 1).

Par To find more information about virtual currency, see the instructions for the Form 1040 and on the Virtual Currency page on IRS.gov.

The IRS states that the worldwide income of a citizen of the U.S. or a resident alien is generally subject to U.S. income tax, regardless of where they live.

U.S. citizens and resident aliens must report unearned income , such as interest, dividends and pensions, from sources outside the US, unless exempted by law or tax treaty. They must also report income from work, such as wages and tips, from sources outside the country.

To meet these requirements, you can find more information in the instructions for the Form 1040 and 1099-SR PDF, Publication 54, Tax Guide for US Citizens and Aliens Resident Abroad and Publication 519, US Tax Guide for Aliens .

The IRS also points out to taxpayers that federal law requires that citizens US citizens and resident aliens report their worldwide income, including income from foreign trusts and foreign banks and other financial accounts. In most cases, affected taxpayers must complete and attach Schedule B to their tax return.

For more details on how to report this income accurately, you can consult the Tax Time Guide and the Publication 17, Your federal income tax.

You may also be interested in:

– Avoid withholding too much or too little tax your wages using the IRS “Withholding Tax Estimator” tool
– IRS reminds taxpayers to use the Where’s My Refund?
tool– Expenses you can deduct on your taxes if you are a teacher

By Scribe