IRS Adds Crypto Question to 2023 Tax Forms; Falsely Answering Carries Penalties

The IRS is asking a yes/no question about crypto transactions on 2023 tax forms that everyone must answer. Answering falsely can lead to penalties.

You must report all crypto income, gains, losses etc. on your tax return regardless of how you answer the yes/no question.

Checking "yes" is safest if you had any crypto activity, even if minor. But other actions like just holding crypto do not require a "yes."

Be careful about selling crypto on behalf of others - clarify your relationship to the crypto assets when answering.

If you failed to report crypto activity in past years, consider amending past returns rather than waiting for IRS action.