In-game currencies Roblox and V-bucks are not reportable

The IRS removed Roblox and V-bucks, used only in gaming environments and not convertible to real currency, from the list of reportable virtual currencies.

March 05, 2020

IRS.gov: Virtual Currencies page was recently updated to remove two in-game currencies, Roblox and V-bucks, from its list of convertible virtual currencies that need to be reported on tax returns. Convertible virtual currencies are those that have an equivalent value in real currency or act as a substitute for real currency. These two currencies are used only in the online games Roblox and Fortnite respectively.

For more information on income earned in game settings, see the Insights article, "Income generated from virtual worlds is still taxable in the real world"

The IRS also posted the following statement to explain the revision:

The IRS recognizes that the language on our page potentially caused concern for some taxpayers. We have changed the language in order to lessen any confusion. Transacting in virtual currencies as part of a game that do not leave the game environment (virtual currencies that are not convertible) would not require a taxpayer to indicate this on their tax return.

Virtual currency defined and reporting

The IRS defined virtual currency as “a digital representation of value, other than a representation of the U.S. dollar or a foreign currency (“real currency”), that functions as a unit of account, a store of value, and a medium of exchange.” The IRS goes on to say, “Some...are convertible, which means that they have an equivalent value in real currency or act as a substitute for real currency"

Schedule 1 (Form 1040 or 1040-SR), Additional Income and Adjustments to Income, includes a virtual currency checkbox. The checkbox is a new item on the 2019 version of Schedule 1. See the Form 1040 instructions.

If the taxpayer did not engage in any transaction involving virtual currency, and the taxpayer doesn’t otherwise have to file Schedule 1, the box doesn’t have to be checked. In other words, the taxpayer does not have to file Schedule 1 just to answer the checkbox question “No”. This only applies if the taxpayer does not have to file Schedule 1.

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