If you’ve filled out your federal tax return by now, you may have noticed that Form 1040 includes a new question on top: Did you have any transactions in bitcoin or other cryptocurrencies last year? But even if your income comes from criminal activity, you’re still required to report it to the IRS. The IRS’ hunt for hidden bitcoin is just one small corner of a vast tax revenue problem: underreported income. Another study by tax experts, including a former IRS commissioner, estimates that more than $600 billion in taxes on 2020 income will go uncollected. “That creates a kind of compliance-free zone.”“Let me tell you my favorite statistic,” he said: In 1986, the tax law was changed to require anyone who claimed a dependent to include the person’s Social Security number on their tax return.

Source: Los Angeles Times April 07, 2021 11:02 UTC