IRS Tweaks Crypto Question Language on 2021 1040 Draft Form

The revised question asking taxpayers about crypto assets is much simpler and clearer.

AccessTimeIconJul 22, 2021 at 11:22 p.m. UTC
Updated Sep 14, 2021 at 1:29 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

The U.S. Internal Revenue Service may finally be close to more clearly stating how crypto assets should be taxed. 

In a draft form of the 1040 form for 2021 released on Wednesday, the tax agency has proposed asking the question "At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?”

The 2021 IRS draft 1040 form
The 2021 IRS draft 1040 form

That compares to the lengthier 2020 question that asked “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?"

The 2020 version of the question generated considerable confusion about whether simply acquiring cryptocurrency or moving it from one wallet to another would incur taxes. 

In its guidance last year, the IRS made it clearer that cryptocurrency transactions would only be taxable if they were sold, exchanged for goods or services or exchanged for property including other crypto assets.

The new language, if adopted, would make it much clearer which type of transactions the IRS has in mind.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.