Crypto taxes

Crypto is property, not currency, so the rules are the ones that apply to stock. Each time you dispose of a coin, you compare what you got for it with what you paid. The difference is a capital gain or loss. Disposals include more than cashing out:

• Selling for dollars
• Swapping one coin for another, including stablecoin swaps
• Paying for goods or services with crypto
• Selling an NFT

Buying crypto with dollars, holding it, and moving it between wallets you own are not taxable.

Crypto you earn is ordinary income at its dollar value on the day it arrives. That covers staking rewards, mining, airdrops, and pay for work. The amount you report becomes your cost basis in those coins, so it is not taxed again when you sell.

The rate depends on how long you held the coins. Held one year or less, the gain is short-term and taxed as ordinary income at 10% to 37%. Held more than a year, it is long-term and taxed at 0%, 15%, or 20% based on your taxable income.

Add the 3.8% net investment income tax if your modified AGI is over $200,000 (single) or $250,000 (married filing jointly).

Example: single, $80,000 of other taxable income. You sell coins bought for $10,000 for $16,000, a $6,000 gain. Held more than a year, the gain is taxed at 15%, or $900. Held a year or less, it is ordinary income in the 22% bracket, or $1,320.

Cost basis is what you paid for a coin, including fees. Proceeds minus basis is your gain or loss. If you cannot show your basis, the IRS can treat it as zero and tax the whole sale.

Since January 1, 2025, basis has to be tracked wallet by wallet. Each exchange account and each self-custody wallet is its own pool. When you sell from a wallet, you use the basis of coins in that wallet, not coins you hold somewhere else.

Within a wallet, the default order is first in, first out. You can sell specific units instead if you identify them no later than the sale and keep a record.

Form 1099-DA is the crypto version of the 1099-B you get for stock. Exchanges and other custodial brokers sent the first ones in early 2026, covering 2025 sales, and those show gross proceeds only. Starting with 2026 transactions, brokers also report cost basis, but only for coins you bought at that broker in 2026 or later and kept there. For coins you bought earlier or transferred in, the basis is yours to supply.

DeFi protocols and non-custodial wallets are not brokers under the rules and do not issue the form. Trades there are still taxable.

Capital losses first offset capital gains, crypto or otherwise. If losses exceed gains, you can deduct up to $3,000 of the excess ($1,500 if married filing separately) against ordinary income each year. Anything left carries forward with no expiration.

The wash-sale rule still does not apply to crypto. With stock, a loss is disallowed if you buy the same shares back within 30 days before or after the sale. With crypto you can sell at a loss, buy the same coin back right away, and still claim the loss.

Giving crypto away is not a sale, so there is no gain to report. In 2026 you can give up to $19,000 per recipient ($38,000 from a married couple) without filing a gift tax return. Above that you file Form 709, but no tax is due until your lifetime gifts pass the $15,000,000 exemption.

The recipient generally takes over your cost basis and holding period, and the gift is not income to them.

Donate coins you have held more than a year to a qualified charity and you can deduct their fair market value if you itemize, with no tax on the gain. Donations over $5,000 need a qualified appraisal; an exchange price printout does not count. The charitable contributions guide covers the 2026 deduction limits.

• Form 8949: one line per sale or swap with the date acquired, date sold, proceeds, basis, and gain or loss. Short-term and long-term go in separate parts.
• Schedule D: the totals from Form 8949. This is where losses net against gains and the $3,000 limit applies.
• Schedule 1: staking, mining, and airdrop income, reported as other income.
• Schedule C: mining or validating run as a business. Expenses are deductible here, and self-employment tax applies.
• Form W-2: wages paid in crypto, like any other pay.

Form 1040 also asks whether you received, sold, exchanged, or otherwise disposed of a digital asset during the year. Everyone who files must answer. It is a yes if you sold, swapped, spent, or earned crypto, and a no if you only bought with dollars, held, or moved coins between your own wallets.

Returns for 2026 are due April 15, 2027.