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Millennials Reported Crypto Transactions on Their Taxes More Than Any Other Age Group Last Year
By Pete Grieve MONEY RESEARCH COLLECTIVE
The crypto question on Form 1040 was edited for this year’s filing season.
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The affinity that younger Americans have for crypto is clear as day in new research on their 2021 federal income tax returns.
Among single individual filers, 4.5% of millennials reported taxable crypto transactions last year — a higher share than any other generation, according to a report from tax prep software provider TurboTax.
What the research says
The percentage of people who reported taxable crypto transactions was much smaller than the share of Americans who say they have made crypto transactions in general.
Overall, 2.9% of tax filers included crypto in their 2021 returns. TurboTax compared that figure to a Pew Research Center survey in which 16% of U.S. respondents said they had invested in, traded or used a cryptocurrency.
- After the 25-to-34 millennial age group, Americans ages 35 to 44 were the second most likely to report crypto transactions on their tax returns, followed by those ages 18 to 24.
- TurboTax found that the likelihood of a filer reporting crypto transactions on their tax returns was highly correlated with income, increasing the more money a filer made.
- There were also regional differences in crypto tax reporting. Filers in the West were most likely to report crypto transactions on their 2021 tax returns, followed by filers in the Northeast.
The next step
Crypto tax reporting rules have changed for the 2023 filing season.
- Since the 2020 tax year, all taxpayers have had to answer a question about crypto at the top of Form 1040. The prominence of the question reflects the importance the IRS places on taxing crypto, given the agency’s belief that there’s significant underreporting of crypto transactions.
- The crypto question was edited for this year’s filing season. It now reads: “At any time during 2022, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, gift or otherwise dispose of a digital asset (or a financial interest in a digital asset)?” Filers must respond “yes” or “no.”
- Those who check the “yes” box have to report their income related to those transactions.
Bottom line
Millennials are reporting crypto transactions on their taxes to a greater degree than other generations. But even among millennials, the fraction of filers who are reporting crypto transactions is tiny.
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