With about 50% of the current investors entering the crypto world and witnessing some of the best and worst market highs and lows, 2021 was a great year for crypto. However, the last date to file your taxes for the fiscal year 2021 was on the 18th of April, 2022.
And if you haven’t filed it yet, there are some serious considerations that you must take into account. Read on to find out, how Internal Revenue Service has been handling crypto tax forms so far and how you can leverage the tax deadline to your full advantage.
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Tax Credits Boost & Refunds
As of now, the average refund for 2021 is $3,175, which is 9.9% greater than in 2020 and the highest average refund since at least 2010. That’s a significant increase, given that the yearly difference has historically been under 1% since about mid-March.
This is most likely due to the extension of numerous credits under President Joe Biden’s $1.9 trillion American Rescue Plan.
American Rescue Plan
The American Rescue Plan Act of 2021 is a $1.9 trillion coronavirus plan of action aimed at assisting the US in recovering from the severe socio‐economic repercussions of the COVID-19 pandemic. It’s part of then-Vice President Joe Biden’s Build Back Better initiative, which also comprises the American Jobs Plan and the American Families Plan.
The plan includes $1,400 in direct incentive payments, an extension of unemployment remuneration, the continuation of eviction and foreclosure moratoriums, and an increase in the Child Tax Credit that is completely recoverable. It offers monies for state and local governments to help offset missed tax income, money for education from kindergarten to eighth grade to resume safely in the midst of the epidemic, and funding for COVID-19 testing and vaccination programs.
Missed the Tax Deadline?
If you have missed your tax deadline (which was on the 18th of April,2022), you should submit a tax extension if you weren’t able to finish and file your crypto tax form.
The IRS might levy a 5% penalty for failing to file, as well as extra interest and penalties. You may use tax software like ZenLedger to file an extension and finalize your return.
Also, it must be noted that there is no penalty for filing late if you expect a refund. That brings us to the next question: when can you receive your refund?
When Can You Receive Your Refund?
If you file online and choose direct deposit, the IRS estimates that you will get your refund in approximately 21 days, if your return is error-free.
For the fiscal year 2021, the IRS has already handled over 70 million returns and issued approximately 52 million refunds. However, the IRS has issued a warning about return processing delays, particularly because the 2022 tax season will include complexities like stimulus payouts and a larger child tax credit.
Improved Customer Service
The amount of time it takes to prepare a tax return has grown from two to four hours. Other sectors have benefited from new automated IRS facilities, such as a site for uploading power-of-attorney documentation.
The IRS has received clearance for an advanced recruiting procedure that may result in the employment of up to 10,000 more workers, half of whom will be employed in the upcoming months. This will boost customer satisfaction and reduce response time.
Bottom Line
However, you’ll have until October 17, 2022, to file your entire 2021 tax return.
Remember that seeking an extension does not give you more time to pay the IRS: To avoid late fees, you must still provide an approximation of your debt. An extension just buys you extra time to finish your tax return.
FAQs
1. Does tax have to be reported on crypto?
In 2014, the Internal Revenue Service issued a report stating that cryptocurrency holdings will be taxable similar to property. This simply means your digital currency is taxed similarly to any other assets you own, such as bonds, stocks, or even gold.
2. Does Coinbase give you crypto tax forms?
Yes, Coinbase delivers two copies of the crypto tax form, Form 1099-MISC to customers. One goes to the qualifying user who has received more than $600 in crypto prizes or staking, while the other goes to the IRS. As a result, if you received a Form 1099-MISC from Coinbase, the IRS has also received one.
3. What is the American Rescue Plan?
The American Rescue Plan Act of 2021 is a $1.9 trillion coronavirus plan of action aimed at assisting the US in recovering from the severe socio‐economic repercussions of the COVID-19 pandemic. It’s part of then-Vice President Joe Biden’s Build Back Better initiative, which also comprises the American Jobs Plan and the American Families Plan.
