The IRS reversed course and will not ask this tax season, for the first time, if taxpayers have used V-Bucks, the money used for in-game purchases for the popular online multiplayer game Fortnite.
In a December release, the IRS stated that “virtual currency that has an equivalent value in real currency, or that acts as a substitute for real currency … Bitcoin, Ether, Roblox, and V-bucks are a few examples of a convertible virtual currency.” Following media coverage Wednesday, however, the directive now only includes Bitcoin when providing examples of virtual currencies.
Taxpayers will still have to answer if they have received, sold, or exchanged any financial interest in “any virtual currency.” The question can be found on Schedule 1 for Form 1040. The question was not on the same form for the 2018 tax year.
The IRS in 2014 announced that virtual currencies would be taxed like capital gains. Those rates are currently 15% and 20%.
IRS Schedule 1 for Form 1040
Thousands of V-Bucks can be earned by playing Fortnite and completing missions. The bucks can be used to buy outfits and accessories for online characters, according to Epic Games.
V-Bucks can also be purchased, which has great potential to create bookkeeping headaches for parents keeping track of the bucks their children have earned or purchased. A V-Buck is only taxable if it is earned. One thousand V-Bucks can be purchased for $9.99. Assuming those earned are of equal value, the taxable transaction would not amount to one penny.
Fortnite is the online, post-apocalyptic survival game that began in 2017. Players spend hours engaged with dozens, if not hundreds, of other online players in virtual combat to be the last one standing. As of last March, the game had 250 million players worldwide, according to Statista, which tracks online market and consumer data.
The IRS did not respond to an inquiry from the Washington Examiner.
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