Crypto Taxes: Expert Guide 2026
Our 2026 guide simplifies IRS crypto tax rules and breaks down everything you need to know about how crypto is taxed and how to report crypto to stay compliant.
Key points
The IRS treats crypto as property for tax purposes.
Short-term capital gains and crypto income (like mining rewards) are subject to income tax.
Long-term capital gains are subject to a lower long-term capital gains tax.
You’ll report crypto in Form 8949 & Schedule D and Schedule 1 (or C).
How is crypto taxed?
In the US, crypto is subject to capital gains tax when you dispose of it and income tax when you earn it.
When do you pay capital gains tax on crypto?
Capital gains tax applies to any profits from the disposal of a crypto asset you’ve held more than a year. Disposals include:
Selling crypto for fiat currency
Trading crypto for crypto
Spending crypto on goods or services
Any losses from these transactions may be offset against your taxable gains.
When do you pay income tax on crypto?
Income tax applies anytime you earn crypto. This includes:
Getting paid in crypto
Mining and staking rewards
Airdrops of crypto
Referral bonuses
Interest from lending
Earning new tokens through DeFi protocols
GameFi rewards
Income tax also applies to any short-term capital gains from disposals of crypto you’ve held less than a year.
How much is crypto taxed?
The amount of tax you'll pay on crypto in the USA depends on how much you earn, the specific transaction, the state you live in, and how long you've held the asset:
Federal and state income tax rates on short-term capital gains and income
Long-term capital gains tax rate and state income tax on long-term capital gains
Long-term capital gains from NFTs deemed collectibles may be taxed at 28%
You can calculate your estimated federal and state taxes with a crypto tax calculator.
Federal income tax rate 2026
These rates apply to short-term capital gains (for crypto held less than a year) and crypto income:
| Tax Rate | Single | Head of Household | Married filing jointly | Married filing separately |
|---|---|---|---|---|
| 10% | $0 to $11,925 | $0 - $17,000 | $0 to $23,850 | $0 to $11,925 |
| 12% | $11,925 to $48,475 | $17,000 to $64,850 | $23,850 to $96,,950 | $11,925 to $48,475 |
| 22% | $103,350 to $197,300 | $64,850 to $103,350 | $96,950 to $206,700 | $48,475 to $103,350 |
| 24% | $197,300 to $250,525 | $103,350 to $197,300 | $206,700 to $394,600 | $103,350 to $197,300 |
| 32% | $250,525 to $626,350 | $197,300 to $250,500 | $394,600 to $501,050 | $197,300 to $250,525 |
| 35% | $250,525 to $626,350 | $250,500 to $626,350 | $501,050 to $751,600 | $250,525 to $375,800 |
| 37% | $626,350+ | $626,350+ | $751,600+ | $375,800+ |
Capital gains tax rate 2026
These rates apply to long-term capital gains (for crypto held more than a year):
| Tax Rate | Single | Head of Household | Married filing jointly | Married filing separately |
|---|---|---|---|---|
| 15% | $48,350 to $533,400 | $64,750 to $566,700 | $96,701 to $600,050 | $48,350 to $300,00 |
| 20% | $533,400+ | $566,700+ | $600,050+ | $300,000+ |
Learn more about short-term and long-term crypto tax rates.
When do you owe tax on cryptocurrency?
Whenever you have a taxable event, such as a disposal or income, you’ll pay tax on crypto. This includes selling, trading, or spending crypto, as well as earning crypto, like through mining or staking rewards. However, some transactions are tax-free.
Tax-free crypto transactions
You do not trigger a taxable event when you:
Buy crypto with fiat currency, like USD
Hold crypto
Transfer crypto between the wallets you own
Gift crypto (provided you haven't reached the lifetime gift limit)
Create an NFT
Donate crypto to charity (tax deductible!)
Can the IRS track crypto?
Yes, the IRS can track crypto.
All major crypto exchanges must now complete KYC (Know Your Customer) checks. This data is used to complete IRS forms, which are sent to both the user and the IRS. From 2026, this form will be the 1099-DA form for disposals, and potentially the 1099-MISC form for income.
The IRS has also previously forced exchanges like Coinbase and Kraken to share further customer data and worked with Chainalysis to match ‘anonymous wallets’ to individuals using this data to crack down on tax fraud. Thousands of investors have reported receiving IRS enforcement letters throughout 2025.
Look out for IRS warning letters
The IRS issues warning letters to investors it believes are underreporting, evading, or owe tax. This letter may come in the form of three possible types: 6173, 6174, or 6174-A.
The first letter requires action, and failure to respond will result in an audit.
The second two letters are warning letters. Provided you’ve appropriately reported your gains and income, you do not have to do anything.
What happens if you don't report crypto?
Failure to report your crypto is tax fraud and may result in fines and even jail time. Crypto enforcement letters and crypto tax audits are increasing in frequency.
There’s even been a high-profile prosecution in which an early Bitcoin investor was sentenced to two years and fined more than $1 million for falsely underreporting capital gains.
When do you report crypto taxes?
You report crypto in your annual tax return by April 15 each year, although this may be extended if it falls on a weekend or holiday to the next working day. For American expats, this deadline is June 15. The extension deadline is October 15, but you must file an extension request before April 15 to be eligible.
What if I forgot to report my crypto?
Many investors weren’t aware of their tax liability from crypto historically, so whether you forgot, or you “forgot”, you can make a voluntary disclosure to the IRS with Form 1040X.
While this may not stop a tax audit, it’s better to act in good faith with the IRS rather than wait for them to catch up with you.
How to calculate crypto capital gains and losses
To calculate gains or losses from crypto, use the formula:
Proceeds - cost basis = capital gain/loss
What are proceeds?
Your proceeds are your sale price, or the total value you received in exchange for disposing of your crypto. This is typically the fair market value of your asset in USD on the day you disposed of it.
What is cost basis?
Cost basis is the original value of your asset, so how much it cost you. It also includes any allowable fees, like purchase fees.
Example
You bought 1 BTC for $33,660 (including a 2% fee). This is your cost basis.
You sold it for $60,000. This is your proceeds.
The sale minus the cost ($60,000 - $33,660) equals a $26,340 capital gain.
Can you write off crypto losses?
Yes. If you have a loss from a taxable disposal, then you can offset this against your taxable gains to reduce your overall tax bill.
There’s no limit to the amount of losses you can offset against capital gains per year, and if you have more losses than gains, then you can carry losses forward to utilize in the future.
You can offset capital losses from crypto against capital gains from any asset, for example, capital gains from stocks. You can also offset up to $3,000 in capital losses each year against ordinary income.
The IRS has guidance clarifying its stance for taxpayers with crypto assets worth less than $0.01, stating no loss deduction is allowed for crypto assets that have devalued to less than $0.01. Without a taxable disposal, "worthless or abandoned" assets don't qualify for a loss claim.
What about losses from stolen crypto?
A recent IRS memorandum clarifies when theft losses may be deductible, and clarifies that theft losses may be deductible if the “loss is due to theft related to a transaction entered into for profit”.
Scenarios given in the memorandum where losses from theft may be deductible include compromised accounts, pig butchering investment scams, and phishing scams.
In general, crypto investment scams may qualify if the taxpayer acted with the intent to earn a profit. Learn more in our lost & stolen crypto guide.
How to use cost basis accounting methods
Most investors have multiple crypto assets, purchased at different times and prices.
Example
2019: You buy 1 BTC for $4,000
2020: You buy 1 BTC for $60,000
2024: You buy 1 BTC for $40,000
2025: You sell 1 BTC for $90,000
Depending on the cost basis you use, your taxable capital gain could vary between $30,000 and $86,000. How do you know which to use?
For multiple assets of the same kind, you’ll use a cost basis accounting method. These methods dictate the order in which you dispose of your assets.
The IRS allows multiple cost basis methods under the Specific Identification method, so you can choose a method that best suits you. Allowable methods include:
Specific Identification (Spec ID): Pick the asset you sold, provided you can identify it with records.
First In First Out (FIFO): The first asset you bought is the first asset you sell.
Last In First Out (LIFO): The last asset you bought is the first asset you sell.
Highest In First Out (HIFO): The most expensive asset you bought is sold first.
From 2025, it is mandatory to use wallet-based cost tracking, where universal was previously allowed. This means you can still utilize a preferred cost basis method within Spec ID by disposing of your assets in a given order, but your transaction records will need to match this.
Which cost basis method is best?
The accounting method you use can have a big impact on your tax bill, but there’s no “best” method. It all depends on your assets and transactions. If we apply the different methods to our example above:
FIFO: Your gain is $86,000
LIFO: Your gain is $50,000
HIFO: Your gain is $30,000
How to calculate income from crypto
To calculate the value of any income from crypto, like mining or staking rewards, you must identify the fair market value of the crypto you received, in USD, on the day you received it.
Example
You received 0.005 BTC as a mining reward on June 5.
The fair market value of Bitcoin that day is $90,000.
The value of your 0.005 BTC mining reward is $450.
You’ll pay federal and state income tax on $450.
What's fair market value?
Fair market value is the estimated price an asset would sell for on the open market between a willing buyer and seller. For crypto, this can vary substantially day by day.
How do you report crypto on your tax return?
You’ll report capital gains, losses, and income from crypto on your annual tax return:
Answer ‘yes’ to the digital asset question on Form 1040: ““At any time during 2025, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”
Every disposal of crypto and subsequent capital gain/loss on Form 8949 and Form Schedule D (1040)
Crypto income on Form Schedule 1 (1040) or Form Schedule C (1040)
Koinly generates completed IRS forms for you, automatically, as well as dedicated reports for software like TurboTax. See our complete guide on how to report crypto taxes.
When is tax due on crypto?
The payment deadline (and filing deadline) is April 15 of the succeeding financial year.
Do cryptocurrency exchanges send tax forms?
Yes. Some crypto exchanges send tax forms, including 1099-MISC. From 2026, all exchanges are required to issue Form 1099-DA.
Previously, exchanges have issued 1099-B and 1099-K. The majority of exchanges no longer issue these due to the confusion they caused both taxpayers and the IRS.
What's 1099-MISC?
Form 1099-MISC reports any miscellaneous income, like from staking rewards or airdrops. Exchanges generally issue this if you’ve earned more than $600 in a financial year.
If you’ve made less than this, it’s still taxable income you need to report.
What's 1099-DA?
Form 1099-DA is a new tax form designed specifically to report gains and losses from digital assets, similar to how a 1099-B is used for traditional investment assets.
It’s important to note that for the majority of investors, who have moved assets between platforms and their own wallets, crypto exchanges will not have accurate cost basis records, so these may be reported as a zero cost basis and result in inflated gains or losses.
How are different cryptocurrency transactions taxed?
With the basics out of the way, let’s dive into common transactions and the tax implications.
How is buying crypto taxed?
TAX FREENo. Buying crypto with USD, or any other fiat currency, is tax-free.
But it’s important you keep records of your purchases to keep a detailed account of your cost basis, so you can accurately calculate gains or losses later if you dispose of your asset.
Do you pay tax for holding crypto?
TAX FREENo. Holding crypto is tax-free.
How is transferring crypto between wallets taxed?
TAX FREENo. Transferring crypto between your own wallets, or platforms you use, is not a disposal and not a taxable event.
However, transfer fees like gas and network fees are taxable disposals.
Example
You transfer 1 ETH from your MetaMask wallet to Coinbase. You’re charged a $5 gas fee for the transfer.
You’ll need to calculate whether your $5 is a gain or loss based on the cost basis of the portion of ETH you disposed of as a transfer fee. A crypto tax calculator like Koinly can do this for you.
How are crypto-to-crypto trades taxed?
CAPITAL GAINS TAXTrading one cryptocurrency for another is a disposal, and any gain is taxable. This includes crypto assets like altcoins, stablecoins, and NFTs.
How is selling crypto taxed?
CAPITAL GAINS TAXSelling crypto for fiat currency like USD is a taxable event according to the IRS, and you’ll have a capital gain or loss as a result.
Example
You bought 1 ETH for $2,000.
Later, you sell 1 ETH for $3,000.
You have a taxable capital gain of $1,000.
Do you pay tax when you spend crypto?
CAPITAL GAINS TAXYes. Spending crypto is a disposal and will result in a capital gain or loss, depending on how the price of your crypto has changed since you purchased it.
There is currently a push from the industry to create a tax exemption for microtransactions, which would exempt tax on spending crypto, provided the value was less than $600, but this is not currently in effect.
How are crypto fees taxed?
TAX DEDUCTIBLESome fees, like buy or sell fees or network fees relating to acquiring or disposing of an asset, can be added to your cost basis. This can reduce your capital gain.
Example
You buy ETH for $1,000. You pay a $10 fee.
Your cost basis is $1,010.
You sell ETH for $1,500. You pay another $10 fee.
Your cost basis is now $1,020, reducing your capital gain from $500 to $480.
How is mining crypto taxed?
INCOME TAXMining rewards are subject to income tax upon receipt, based on the FMV of your mining reward in USD on the day you receive it.
If you later dispose of your mining rewards, you’ll pay capital gains tax on any profit.
Those mining crypto as a business can deduct relevant expenses, like equipment or electricity costs.
How is staking crypto taxed?
INCOME TAXStaking rewards are taxed as income on receipt. If you later dispose of staking rewards, capital gains tax will apply to any profits.
In some instances, depending on how you’re staking, your staking transactions may be disposals. For example, if you’re using a liquid ETH staking protocol where you receive tokens representing your staked ETH, these transactions would be crypto-to-crypto trades and taxed as such instead.
IRS guidance has clarified the point at which staking rewards are taxable, stating rewards are taxable at the point the taxpayer has 'dominion and control' over the assets. In other words, when your rewards are unlocked.
How are airdrops taxed?
INCOME TAXAirdrops are seen as miscellaneous income by the IRS and are subject to income tax. If you later dispose of airdropped tokens, capital gains tax may apply.
Example
You get 200 1INCH tokens in an airdrop.
The FMV of the tokens the day you receive them is $700. You’ll pay income tax on $700.
Later, you sell your tokens for $800. You have a taxable capital gain of $100.
How are hard forks taxed?
INCOME TAXThe IRS is clear, albeit unfairly, that any tokens received due to a hard fork are taxable income on receipt. Similarly, any disposal of these tokens later may be subject to capital gains tax.
A soft fork is not a taxable event.
Example
You got 1 BCH when it split from BTC. The FMV is $300 the day you receive it. You have $300 in taxable income.
Later, you sell 1 BCH for $600. You have a taxable capital gain of $300.
How is crypto interest taxed?
INCOME TAXIf you’re earning interest from your idle crypto assets, you’ll pay income tax on any interest received. If you later dispose of these rewards, it’s a taxable disposal.
How are crypto loans taxed?
CAPITAL GAINS TAXThere is no specific guidance from the IRS, but in general, receiving a loan is not a taxable event.
However, it depends on the crypto lending platform you’re using. As if you’re seen to be disposing of your crypto, for example, by receiving tokens in return for your collateral, this may be a crypto-to-crypto trade and a disposal subject to capital gains tax.
How are crypto gifts taxed?
TAX FREEGifting crypto is not generally a taxable event, provided you’re under your lifetime gift tax exclusion.
Each American taxpayer enjoys an annual gift tax exclusion of $19,000 (for 2025). This allowance is per person. If you gift more than this, you may need to file Form 709.
There is also a lifetime gift tax exclusion of $13.99 million (for 2025). Gifts over this value may be subject to a 40% gift tax.
Receiving a gift is also a non-taxable event. The cost basis of any gift is inherited by the recipient, provided there are records to prove it. If there is no documentation to support the donor’s basis, the basis is zero according to IRS guidance.
How is donating crypto taxed?
TAX DEDUCTIBLESpread love and Bitcoin, because donating crypto is tax-deductible, with a few caveats:
Your donation must be to a registered charitable organization
The charity must have 501(c)3 status to deduct your donation
The deduction is the FMV of the asset on the day you donate it
You must complete Form 8283 for donations exceeding $500
Donations over $5,000 need a qualified appraisal for a deduction
Crypto is a non-cash donation, including stablecoins
For cash donations, you can deduct the full value of the donation up to 60% of your adjusted gross income and carry any unused deductions forward for 5 years
For non-cash donations, you can deduct between 20% and 50% of your adjusted gross income, depending on the type of organization
You can check a charity's 501(c)3 status in the IRS exempt organization database.
How are crypto margin trades taxed?
CAPITAL GAINS TAXProvided you’re trading as an individual investor, any realized profits when you close a margin trade position are subject to capital gains tax.
The same short-term and long-term capital gains tax rates apply to capital gains from margin trading. Liquidations are disposals from a tax perspective.
How are crypto futures taxed?
CAPITAL GAINS TAXProvided you’re trading as an individual investor, any realized profits when you settle a futures contract are subject to capital gains tax.
If you're trading regulated crypto futures, there is a 60/40 rule that taxes 60% of capital gains as long-term and 40% as short-term, regardless of how long the position was open.
How are DeFi transactions taxed?
INCOME/CAPITAL GAINS TAXThere is no guidance from the IRS on the tax implications of specific DeFi transactions, but the same existing tax rules apply to these transactions, meaning:
Profits from disposals, such as trading liquidity pool tokens, are taxed as capital gains.
Earning new tokens, such as through staking protocols, is taxed as income.
Given that the DeFi space is constantly evolving, you should speak with an experienced crypto tax accountant in the USA for guidance.
How are NFTs taxed?
INCOME/CAPITAL GAINS TAXNFTs are treated largely the same as any other crypto asset from a tax perspective, meaning:
Buying an NFT with crypto is a taxable disposal (of the crypto you used to purchase it)
Selling or trading an NFT is a taxable disposal
Proceeds from selling NFTs you created may be subject to income tax
Under updated IRS guidance, some NFTs may be deemed collectibles. Any profits from disposals are still subject to capital gains tax, but a higher rate of 28% may apply to long-term capital gains from NFTs deemed collectibles.
How do you know if your NFT is a collectible?
The IRS guidance says that "until additional guidance is issued, the IRS intends to determine whether an NFT is treated as a collectible by using a 'look-through analysis".
In other words, the IRS will "look through" the NFT to the underlying asset it represents to determine whether it's a collectible or not based on existing collectibles guidance. This could include NFTs that tokenize art, precious metals, coins, and more.
How are DAOs taxed?
INCOME/CAPITAL GAINS TAXDAOs (Decentralized Autonomous Organizations) are member-owned communities that operate without centralized leadership. Members can earn money from a DAO through profit distributions or by selling their tokens.
The IRS has not issued specific guidance on DAO taxes. Since most DAOs aren’t registered entities and lack central control, they generally can’t pay taxes themselves. They function much like flow-through entities, meaning income is passed directly to members, meaning:
Any income distributed by a DAO is typically taxable as ordinary income.
Profits from disposing of DAO tokens trigger capital gains tax.
One exception is Wyoming, which recognizes DAOs as a type of LLC. This kind of legal status may influence how a DAO is taxed in the future.
How are crypto gambling winnings taxed?
Gambling winnings are taxable income according to the IRS and are subject to both federal and state income taxes.
What records should I keep for crypto taxes?
The IRS says taxpayers need to maintain records that are sufficient to establish the position taken on their tax return. As a minimum, you should keep the following:
The date of your transactions.
The fair market value of your crypto in USDon the day you acquired it.
The fair market value of your crypto in USD on the day you disposed of it.
The capital gain or loss you made from each transaction.
What the transaction was and the parties involved.
Receipts of purchase and sale.
Records of transfers and transactions from all your crypto wallets and exchanges.
The IRS can audit tax returns from up to six years ago, so the best practice is to keep these records for at least six years to ensure you have the information you need should you face an audit.
This is easy to do with crypto tax software like Koinly.
How to lower crypto taxes
There’s no legal way to evade crypto tax entirely, but there are several strategies to help you legally reduce crypto taxes.
HODL
Make the most of lower long-term capital gains tax rates by HODLing your assets for more than a year.
Tax loss harvesting
Capital losses from crypto can offset an unlimited amount of capital gains, and up to $3,000 in ordinary income each year. Additional losses can be rolled over.
Investors track unrealized losses and realize them ahead of the end of the financial year in a strategy known as tax loss harvesting in order to reduce their tax bill.
Know the CGT allowance
If you earn less than $48,350 a year (for 2025) as a single taxpayer, then you’ll pay no long-term capital gains tax.
Gift and donate
Gifting your crypto is tax-free (under the lifetime exemption limit), and donating your crypto to a charitable organization is tax-deductible.
Invest in IRAs
Investing in your retirement is a great way to avoid crypto tax. HODL your assets long-term, tax-free in a Bitcoin IRA.
Compare cost basis accounting methods
Cost basis matters. FIFO, LIFO, HIFO, and Spec ID all make a huge impact on your tax bill, and you can pick from any of them. See which works best for your crypto taxes.
Why is reporting crypto taxes so difficult?
Largely because existing tax reporting frameworks simply aren’t built for crypto, or any transactions at volume.
Crypto investors need to track cost basis across platforms and wallets, identify every taxable disposal, and calculate every capital gain or loss, as well as identify the fair market value of any income in USD on the day it’s received.
Without all of this, you won’t be able to accurately report your investments on your tax return.
Gathering this information alone is a challenge. Most investors don’t keep detailed records of their transaction history, purchase prices, fees, and proceeds for every single transaction, across every platform – and trying to can quickly turn into an agonizing exercise in maintaining spreadsheets.
And that’s exactly why Koinly was invented: to make crypto tax simpler.
Why can't crypto exchanges provide accurate tax forms?
Unlike most other investments, crypto is highly portable and decentralized. Meaning, you might buy it on one platform, keep it in a wallet while it’s idle, and sell it on another. There’s also no centralized database of records.
For exchanges, this presents a challenge when it comes to taxes, because to accurately calculate your capital gain or loss from a disposal, they need to know your cost basis. Currently, there is no centralized database or method for exchanges to share this information, and given the tenets of crypto, there may never be.
In other words, the second you transfer crypto on or off an exchange, that exchange will not be able to track your cost basis (or what you’ve done with your asset and whether you disposed of it) and will not be able to accurately produce tax forms.
How to track crypto for taxes
You can fight piles of spreadsheets and go it alone, or you can use a crypto tax calculator like Koinly.
Koinly automatically imports and collates all of your transaction data across every exchange you use. It then identifies what’s taxable, what’s not, calculates capital gains, losses, income, fees (and more), before generating accurate and compliant tax reports to help you file.
How to do crypto taxes with Koinly
Sign up for a free account on Koinly.
Select your location (US) and fiat currency (USD).
Select your accounting method (Koinly defaults to wallet-based FIFO).
Automatically import all of your transaction data for every wallet, exchange, and platform you’ve used via API or upload CSV files.
Once it’s crunched the numbers, head over to the tax summary page. Check your figures, and once you’re happy, upgrade to a paid plan from $49 to download a report. Koinly can generate Form 8949, Schedule D, Schedule 1, TurboTax reports, and more for US investors.
FAQs
Is swapping crypto taxable?
Yes. Swapping one cryptocurrency for another is a taxable event as you're disposing of a crypto asset. Any gain is subject to short or long-term Capital Gains Tax depending on how long you've held your crypto.
Do I have to report crypto losses on taxes?
It benefits you to report crypto losses on taxes - even if you have no gains to report! You can offset up to $3,000 in losses against ordinary income to reduce your tax bill each year, as well as carry forward any losses you haven't offset to future financial years to use to reduce your tax bill going forward.
Is converting crypto a taxable event?
Yes, like above, converting crypto into another crypto is a taxable event. It's a disposal from a tax perspective and any gain is subject to Capital Gains Tax.
What's Form 8300 for crypto transactions over $10,000?
As of January 16, 2024, the IRS has clarified that businesses with certain digital transactions do not need to report using Form 8300 until further regulations and guidance are issued. Prior to this, the industry was in a panic over a new tax reporting law that came into effect on January 1, 2024, stating persons involved in a trade or business will need to report over $10,000 received through Form 8300.
While the form itself wasn't new, the Infrastructure Investment and Jobs Act specified that “anyone who receives $10,000 or more in cryptocurrency in the course of their trade or business to make a report to the IRS about that transaction.”
However, when this broad rule is applied to crypto, it is often difficult to collect all the information necessary to file due to the pseudonymous nature of cryptocurrency transactions. The IRS hasn't yet clarified the grey areas around this legislation, and as such, has stated businesses with crypto transactions over $10,000 do not need to file Form 8300 until further guidance is issued. We'll update this guide as soon as the IRS releases more information.
Do I need to report crypto if I didn't sell?
If you only purchased crypto and did not sell, swap, or spend your crypto, or otherwise earn crypto then you do not need to report your crypto. The IRS is only interested in gains, losses, and income from crypto - but they're clear that selling isn't the only way you can dispose of crypto - so if you've swapped or spent crypto as opposed to selling it - you'll have a gain or loss you need to report. As well as this, if you've earned crypto through mining, staking, or other means, you'll need to report this too.
What is virtual currency considered for tax purposes?
Virtual currency, including crypto, is viewed as a property from a tax perspective and that dictates its tax treatment.
How much tax on crypto gains?
You'll pay up to 37% in tax on short-term crypto gains and up to 20% in tax on long-term crypto gains.
Do you have to report crypto purchases on taxes?
No. The IRS is clear that in terms of reporting, taxpayers should report income, gains, or losses from crypto in their tax returns. If you have purchased crypto and not sold, swapped, or spent it (nor earned said crypto in any way), then you do not have any income, gain, or loss to report.
How to report NFT taxes?
NFT taxes work the same as crypto taxes because they're all the same from a tax perspective. You'll report any disposals from selling or swapping NFTs in Form 8949 and summarize your gain or loss in Schedule D (Form 1040). If you have any income from NFTs - such as selling and creating NFTs - you'll also need to report this in your tax return as additional income. Find out more about which IRS forms to use to report crypto.
Do you have to pay tax on crypto losses?
No. You do not have to pay tax on crypto losses. In fact, from a tax perspective, losses are beneficial as you can offset them against gains to reduce your overall tax bill.
Does the FBAR include foreign crypto exchanges?
So far, the FBAR only concerns fiat currency holdings abroad - so if you have crypto (including stablecoins) in foreign exchanges then at the time of writing, the FBAR does not include crypto holdings in foreign exchanges. However, under recent proposed regulation, FinCEN may be looking to include foreign crypto accounts in FBAR reporting requirements.
Is converting BTC to USDC a taxable event?
Yes. Despite being pegged to the dollar, stablecoins like USDC are crypto assets from a tax perspective and are taxed as such. Any gain from a crypto to crypto trade like BTC to USDC is taxable.
Is crypto subject to wash sale rules?
No, cryptocurrencies are currently not subject to wash sale rules, unlike stocks. However, this all looks set to change soon. With the impending changes to crypto legislation, this tax loophole will likely be closed. You can learn more about crypto tax loss harvesting and wash sale rules in our tax loss harvesting guide.
What does the IRS say about Bitcoin and taxes?
For the IRS, Bitcoin is viewed the same as any other cryptocurrency when it comes to taxes. That means you'll pay Capital Gains Tax or Income Tax depending on your Bitcoin transactions.
