As we delve into the new year, several tax developments are on the horizon, encompassing technology advancements, impending tax regulations, and the integration of cryptocurrency into tax forms.
The Internal Revenue Service (IRS) has been at the forefront of incorporating new technology systems to streamline processes.
Recent Developments in Tax Technology Systems
Notable introductions include the Information Returns Intake System portal (IRIS) and the Filing Information Returns Electronically system (FIRE). While these systems aim to enhance efficiency, recent glitches and errors have underscored the challenges of technology adoption.
Despite these hiccups, the IRS remains optimistic about the upcoming tax season, emphasizing successful testing and operational continuity.
However, concerns linger regarding potential last-minute tax law changes, particularly surrounding the revival of tax breaks like the Child Tax Credit.
IRS Readies for Tax Season Amid Last-Minute Changes and Workforce Boost
With an anticipated 128.7 million individual tax returns expected by the April 15 deadline, the IRS has bolstered its workforce, courtesy of funds allocated by the Inflation Reduction Act of 2022.
Additional staff members will assist taxpayers in navigating changes to the Tax Code, both over the phone and in person.
One significant change this year involves the inclusion of questions regarding income from digital assets, notably cryptocurrency, on tax forms for various entities, including individuals, estates, trusts, partnerships, and corporations.
Taxpayers must report all income derived from digital asset transactions, including wages paid in digital assets and proceeds from asset sales or exchanges.
For individuals, reporting income from digital assets entails disclosing values received as wages or earnings from independent contracting on Schedule C (Form 1040).
Moreover, individuals engaging in digital asset transactions related to trade or business must utilize Schedule C to report such activities.
As taxpayers gear up for the 2024 tax season, staying informed about these developments and adhering to reporting requirements will be crucial.
The integration of technology and the recognition of cryptocurrency underscore the evolving landscape of taxation, necessitating vigilance and compliance from taxpayers across the board.
