Fortnite and Roblox players don’t need to report gaming currency on their 2019 tax returns as long as that money stays in the “game environment,” the IRS said.
The IRS for the first time this year is asking taxpayers to disclose if they had acquired or sold virtual currency. The agency on Wednesday pulled language from its website that appeared to signal that millions of gamers might have to tell the IRS about the in-game cash they had earned to buy avatar upgrades or special abilities.
Some video games like Roblox, in limited circumstances, will allow users to cash out their in-game currency for U.S. dollars. But gaming currencies that stay within the game aren’t convertible virtual currencies, the IRS said Friday.
“The IRS recognizes that the language on our page potentially caused concern for some taxpayers,” the IRS said. “We have changed the language in order to lessen any confusion.”
On its website the IRS defines a convertible virtual currency as one that has an equivalent value in real currency or acts as a substitute for real currency. It also says these types of virtual currencies can be “digitally traded between users and can be purchased for, or exchanged into, U.S. dollars, euros, and other real or virtual currencies.”