Frost Law
The final version of the 2024 Schedule 1 and its instructions (part of the Form 1040 instructions) describe three major changes to the schedule that impact taxpayers filing their 2024 tax returns. These changes reflect evolving IRS guidance and impact how certain income and adjustments are reported.
Concerned about how these changes to Schedule 1 might affect your 2024 tax return? Frost Law can help you navigate these updates and ensure accurate filing. Call us today at (571) 490-8269 for a consultation.
If a taxpayer received a Form(s) 1099-K that shows payments that were included in error (for example, money for gifts or reimbursements) or for personal items that sold at a loss (for example, an old refrigerator), enter the amount that was included in error or for personal items sold at a loss in the entry space at the top of Schedule 1. The entry space is not a numbered line on Schedule 1.
The IRS has not updated prior guidance on Form 1099-K to reflect this reporting change. In Fact Sheet 2024-23, the IRS previously indicated accounting for certain Form 1099-Ks with an income entry on line 8z and an offsetting adjustment on line 24z.
If, in 2024, the taxpayer received ordinary income, in connection with digital assets, that is not reported elsewhere on Form 1040 (i.e., income from forks or staking), this income is reported on line 8v.
The IRS previously held in Revenue Ruling 2019-24 that the fair market value (FMV) of cryptocurrency received in a hard fork is ordinary income to the taxpayer. In addition, in Revenue Ruling 2023-14, the IRS held that the FMV of cryptocurrency received as a staking reward is ordinary income to the taxpayer.
The instructions state to leave line 24z blank, and a taxpayer’s Form 1040 cannot be electronically filed if there is an entry on line 24z.
Contact Frost Law today at (571) 490-8269 or fill out our contact form for further guidance on these Schedule 1 updates and all your tax-related needs.
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