New US rule ensures proper Crypto tax payment on transactions

Prevent Crypto tax evasion in USA:

Cryptocurrency owners and sellers in the US have always been required to pay Crypto taxes on their earnings, but a new rule from the US Treasury Department aims to ensure they are paying the correct amounts. This new rule mandates that cryptocurrency platforms, such as exchanges and payment processors, report their users' transactions to the Internal Revenue Service (IRS). The goal is to prevent Crypto tax evasion by providing the IRS with precise information on how much Crypto taxpayers owe.

The rule will also simplify the process for people to declare their earnings. Brokers will now be required to provide their users with a 1099 form, specifically the 1099-DA (Digital Asset Proceeds From Broker Transaction). This form was introduced by the IRS last year to track cryptocurrency transactions, and the final version will be available soon. The rule includes a threshold of $10,000 for reporting transactions involving stablecoins, which are cryptocurrencies tied to fiat currencies like the US dollar.

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Aviva Aron-Dine, the Treasury’s acting assistant secretary for Crypto tax policy, stated that the new rule would benefit both investors in digital assets and the IRS. She explained that the regulation would provide the necessary documentation for easily filing and reviewing Crypto tax returns. Additionally, the rule aims to reduce Crypto tax evasion by wealthy investors by ensuring that all Crypto taxable earnings are properly reported.

The new reporting requirements will apply only to platforms that hold digital assets, such as Coinbase and Binance. Decentralized platforms are not covered by this rule and will be subject to separate regulations expected to be finalized later this year. Brokers will start reporting digital asset sales proceeds in 2026 for transactions completed in 2025, meaning that for the year 2024, crypto traders will still need to manage their Crypto tax reporting independently.

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The new rule from the US Treasury Department is set to improve the accuracy of Crypto tax payments on cryptocurrency transactions. By requiring platforms to report their users transactions, the rule aims to prevent Crypto tax evasion and make it easier for individuals to declare their earnings. While the rule will take full effect in 2026, it represents a significant step towards better regulation and transparency in the cryptocurrency market.