In this guide, we’ll break down everything you need to know about cryptocurrency taxes. From the high-level tax implications to the final tax forms you need to fill out, youʼll learn all about what you need to stay compliant and report your taxes properly.
Written by:
Miles Brooks
Reviewed by:
Jordan Bass
Our Editorial Standards:
Our content is designed to educate the 500,000+ crypto investors who use the CoinLedger platform. Though our articles are for informational purposes only, they are written in accordance with the latest guidelines from tax agencies around the world and reviewed by certified tax professionals before publication. Learn More
In the United States, cryptocurrency is subject to income and capital gains tax. As of 2026, cryptocurrency exchanges report crypto transactions to the IRS via Form 1099-DA and Form 1099-MISC. However, 1099-DA can contain inaccurate/incomplete information.
To accurately report your cryptocurrency taxes, you’ll need to keep records of all of your cryptocurrency transactions for the year. Alternatively, you can use crypto tax software like CoinLedger to handle the process in minutes.
Do you pay taxes on cryptocurrency?
In the United States, cryptocurrency is subject to capital gains tax (when you dispose of cryptocurrency) and income tax (when you earn cryptocurrency).
As of 2026, centralized cryptocurrency exchanges like Coinbase issue Form 1099-DA to customers and the IRS. These forms are designed to report your cryptocurrency disposals to the IRS.
In many cases, Form 1099-DA can contain inaccurate/incomplete information. That’s why it’s recommended to doublecheck the information on the form with your own records (more on this later).
How much is cryptocurrency taxed?
Your tax rate depends on how much you earned during the year and how long you held your cryptocurrency.
How much tax do I pay on cryptocurrency?
If you earned cryptocurrency income or disposed of your crypto after less than 12 months of holding, you’ll pay tax between 10-37%.
Tax Rate
Single
Married Filing Jointly or Surviving Spouse
Head of Household
Married Filing Separately
10%
$0 to $11,925
$0 to $23,850
$0 to $17,000
$0 to $11,925
12%
$11,926 to $48,475
$23,851 to $96,950
$17,001 to $64,850
$11,926 to $48,475
22%
$48,476 to $103,350
$96,951 to $206,700
$64,851 to $103,350
$48,476 to $103,350
24%
$103,351 to $197,300
$206,701 to $394,600
$103,351 to $197,300
$103,351 to $197,300
32%
$197,301 to $250,525
$394,601 to $501,050
$197,301 to $250,500
$197,301 to $250,525
35%
$250,526 to $626,350
$501,051 to $751,600
$250,501 to $626,350
$250,526 to $375,800
37%
$626,351 or more
$751,601 or more
$626,351 or more
$375,801 or more
If you dispose of your cryptocurrency after 12 months of holding, you’ll pay tax between 0-20%.
Tax Rate
Single
Married Filing Jointly
Married Filing Separately
Head of Household
0%
$0 to $48,350
$0 to $96,700
$0 to $48,350
$0 to $64,750
15%
$48,351 to $533,400
$96,701 to $600,050
$48,350 to $300,000
$64,751 to $566,700
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How do crypto tax brackets work?
Income earned in the U.S. (including crypto income) isn’t subject to a flat tax rate. Rather, taxpayers pay different tax rates on each individual portion of income as they progress through tax brackets. For example, if a taxpayer has $25,000 of ordinary income for the year, they will pay 10% on the first $11,925 and 12% on the next $13,075.
When do you owe taxes on your crypto?
You incur a taxable event when you earn or dispose of cryptocurrency.
When do you owe capital gains tax on cryptocurrency?
When you dispose of cryptocurrency, you’ll recognize a capital gain or loss depending on how the price of your crypto has changed since you originally received it.
Here’s a few examples of crypto disposals subject to capital gains tax:
Selling your cryptocurrency
Trading it for another crypto
Using crypto to buy goods and services
Example:
Sean buys $3,000 of BTC.
Later, he sells his BTC for $3,300.
Sean incurs $300 of capital gain.
When do you owe income tax on cryptocurrency?
When you earn cryptocurrency, you’ll recognize income based on the fair market value of your crypto at the time of receipt. Examples of income include airdrop rewards, staking rewards, and mining rewards.
Tax-free cryptocurrency transactions
Not every cryptocurrency transaction is subject to tax! You do not trigger a taxable event when you:
Hold cryptocurrency
Buy cryptocurrency with fiat currency and hold it
Transfer crypto from one wallet you own to another wallet you own
Use cryptocurrency as collateral for a loan
Can the IRS track your cryptocurrency?
It’s often assumed that because cryptocurrency is anonymous, evading taxes is fairly easy. This is not true.
As of 2026, all centralized exchanges issue Form 1099-DA, which reports your cryptocurrency sales and disposals to the IRS. In addition, exchanges typically issue Form 1099-MISC if you’ve received more than $600 of ordinary income from cryptocurrency.
If you don’t report transactions contained on 1099 forms on your tax return, it’s likely that you’ll automatically be sent a warning letter from the IRS.
In addition, the IRS can use the information that it receives from major exchanges to match ‘anonymous’ wallets to known individuals. In the past, the agency has worked with contractors like Chainalysis to analyze the blockchain and crack down on tax fraud.
What are 1099 forms?
1099 forms are designed to report income outside of your job to the IRS. As noted earlier, cryptocurrency exchanges typically issue Form 1099-DA and Form 1099-MISC.
What is Form 1099-DA?
As of 2026, all centralized cryptocurrency exchanges are required to issue Form 1099-DA. This form is designed to report your proceeds from cryptocurrency disposals (e.g. sales or crypto-to-crypto trades). It’s important to remember that these forms can be inaccurate, especially if you transferred crypto between wallets (more on this later).
What is Form 1099-MISC?
Form 1099-MISC is a form designed to report ‘miscellaneous’ income, such as income from staking and airdrops. Most exchanges will send you this form if you’ve earned more than $600 in miscellaneous income during the tax year.
What happens if you don’t report your crypto taxes?
Intentionally not reporting your cryptocurrency gains, losses, and income on your taxes is considered tax fraud by the IRS. If the proceeds you report on your tax return are significantly different from the proceeds that have been reported on Form 1099-DA, it’s likely that the IRS will investigate further.
The IRS can enforce a number of penalties for tax fraud, including criminal prosecution, five years in prison, and a fine of up to $250,000.
Over the past several years, the IRS has aggressively cracked down on cryptocurrency tax compliance issues. It’s updated the main US income tax form (1040) to include a question that every US taxpayer must answer under penalty of perjury:
At any time during 2025, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?
As exchanges start to issue Form 1099-DA, it’s likely that we’ll see more cryptocurrency tax audits and tax prosecutions.
How do you lower your crypto taxes?
While there’s no way to evade your cryptocurrency taxes, the strategies below can help you legally reduce your crypto taxes!
1. Hold your cryptocurrency
Holding your cryptocurrency for the long-term comes with tax benefits! When you dispose of crypto held for longer than a year, you pay a lower tax rate on your capital gains.
2. Tax-loss harvesting
Capital losses from cryptocurrency can offset an unlimited amount of capital gains and up to $3,000 of income for the year. Additional losses can be rolled forward into future tax years.
If you’re planning on holding your cryptocurrency for the long-haul, a cryptocurrency IRA can be a great option. With a self-directed IRA, you can hold cryptocurrencies and dispose of them on a tax-free/tax-deferred basis once you’re near retirement age.
For the 2025 tax year, the deadline for American taxpayers is April 15, 2026. The deadline for American expatriates is June 15, 2026. The extension deadline is October 15, 2026. You will need to fill an extension request before April 15 to be eligible for this deadline.
What if you forgot to report your crypto taxes?
If youʼre like many other crypto investors, thereʼs a strong chance that you werenʼt always aware of the fact that your crypto-related income needed to be reported on your taxes.
If you are in this situation, donʼt worry. You can amend a prior year's tax return to include your crypto-related income with IRS Form 1040X.
Itʼs always better to amend your return in good faith rather than waiting for the IRS to find you. While there is never a way to guarantee that someone won’t be audited after amending their taxes, paying your taxes before the IRS begins an investigation can go a long way to demonstrate that further inquiry is unlikely to find additional reporting errors.
How to calculate your cryptocurrency capital gains and losses
To calculate your capital gains and losses from each of your crypto sells, trades, or disposals, simply apply the formula:
What is proceeds?
Proceeds represents how much value you received in exchange for disposing of your crypto-asset. Typically, this will be the fair market value of your assets at the time of disposal minus the cost of relevant fees.
What is cost basis?
Cost basis represents how much money you put into purchasing your property (i.e. how much it cost you). Cost basis includes purchase price plus all other costs associated with purchasing your cryptocurrency (fees, etc).
Example:
Charlie buys ETH for $250.
Later, he sells ETH for $400.
Charlie has a capital gain of $150.
In the example above, Charlie’s cost basis is $250, while his proceeds are $400.
Applying the formula:
$400 (Proceeds) - $250 (Cost Basis) = $150 Gain
Why is my cost basis wrong on Form 1099-DA?
You may have received a Form 1099-DA from your cryptocurrency exchange with missing/incomplete cost basis.
During the 2025 tax year, exchanges are not required to track and report cost basis on Form 1099-DA. As a result, these types of cost basis issues are common. Typically, these issues occur when you transfer crypto from one exchange to another.
Example
Ryan buys $10,000 of BTC on Exchange A.
He transfers his BTC to a cold wallet.
Months later, he sells his BTC for $15,000 on Exchange B.
In this case, Ryan should have $5,000 of capital gain. However, if he doesn’t have records of his original purchase, he may be responsible for a $15,000 gain.
If you’re in a situation like this and your cost basis is wrong on Form 1099-DA is wrong, don’t panic. There’s no need to request a corrected Form 1099-DA from your exchange.
At this time, the IRS allows taxpayers to submit a cost basis for their transactions on their tax return, provided that they have supporting documentation. Use crypto tax software to find your accurate cost basis, then report your transactions on Form 8949 using this information.
How do I calculate my cryptocurrency capital gain if I don’t know my cost basis?
In some cases, you may not be able to find your original cost basis for your cryptocurrency. This often happens if you no longer have access to the exchange account that you used to buy your crypto.
If you find yourself in this situation, you should try to reconstruct your purchase history to estimate your basis. You can look at bank transfer statements and blockchain history to try to find your original purchase price.
In cases where there’s no way to estimate your original cost basis, you must recognize your entire proceeds as capital gain.
How to use cost basis methods
In some situations, investors buy the same cryptocurrency at multiple price points.
Example:
January 1: Henry buys 1 BTC for $15,000
February 3: Henry buys 1 BTC for $50,000.
March 3: Henry buys 1 BTC for $40,000.
April 1: Henry sells 1 BTC for 15,000.
What is Henry’s capital gain?
If you find yourself in this situation, you’ll need to use a cost basis method like FIFO, LIFO, or HIFO. These cost basis methods determine the ‘order’ in which your cryptocurrency gets disposed of.
Let’s walk through how these cost basis methods work.
FIFO: FIFO is first-in first-out. The first cryptocurrency you acquired is the first you dispose of when calculating your gain or loss.
LIFO: LIFO is last-in first-out. With this method, the last cryptocurrency you acquired is the first you dispose of. LIFO can help you save money on taxes in a period of rising prices.
HIFO: HIFO is highest-in first-out. With this method, the highest price cryptocurrency you acquire is the first you dispose of.
FIFO is considered the default method for most investors. If you choose a ‘specific identification’ method like LIFO or HIFO, you’ll need to specifically identify each individual unit of cryptocurrency.
In our example above, depending on which method he uses, Henry's gain/loss would be the following:
FIFO: $0 (15,000 - 15,000)
LIFO: -$25,000 (15,000 - 40,000)
HIFO: -$35,000 (15,000 - 50,000)
Why reporting your crypto taxes can be difficult
As you can see from the examples above, calculating your capital gains and losses from your crypto trading activity requires keeping track of your cost basis, fair market value, and USD gain or loss every time you dispose of a crypto (trade, sell, spend, etc).
Without this information, you cannot accurately calculate your realized income or capital gains from your trading activity, and you won’t be able to accurately report them on your tax return.
Gathering and maintaining this information is extremely challenging for many cryptocurrency investors as most havenʼt been keeping detailed records of their investing activity. Tracking the cost basis and USD prices for every cryptocurrency across all exchanges, wallets, and protocols at any given time quickly turns into a difficult, if not impossible, spreadsheet exercise.
This is the reason why hundreds of thousands of crypto investors are turning to crypto tax software like CoinLedger to automate their crypto tax reporting. You can sign up for a free account here.
How do you report crypto on your taxes?
You’re required to report your capital gains income and ordinary income on your taxes. We dive into the reporting for each of these income types below.
How to report crypto capital gains
Your capital gains and losses from your crypto trades get reported on IRS Form 8949.
Form 8949 is the tax form used to report sales and disposals of capital assets, including cryptocurrency.
To fill out Form 8949, list all of your cryptocurrency trades, sells, and disposals into the relevant column (pictured below) along with the date you acquired the crypto, the date your crypto was sold or traded, your gross proceeds, your cost basis, and your gain or loss for the trade.
Once you have each trade listed, total them up and fill in your net capital gain or loss for the year at the bottom.
Can I use Form 1099-DA to report my capital gains?
Remember, Form 1099-DA is an informational form. That means that even if you receive it, you are still required to fill out Form 8949.
As mentioned earlier, cost basis information on Form 1099-DA can be inaccurate. If you simply copy and paste numbers from the form, you may overpay on your taxes.
Here are the steps you should take if you receive Form 1099-DA:
Keep your own records: Make sure to keep your own records of your cryptocurrency transactions across all of your wallets and exchanges. Alternatively, you can use crypto tax software to track them for you automatically.
Double-check your 1099-DA: You should match proceeds you report on your tax return with proceeds on your Form 1099-DA. Then, calculate cost basis using your own records, and refer to these records when you fill out Form 9040.
Report your capital gains and losses: Report your capital gains and losses on Form 8949. You should include cost basis, proceeds, the price of your crypto at acquisition and disposal,
(Optional) Request a corrected form: In some cases, your Form 1099-DA may contain major errors (purchases recorded as sales, grossly inaccurate proceeds). If you find yourself in this situation, request a corrected Form 1099-DA from your exchange. Remember, this step is not necessary if your cost basis information is wrong.
How to report crypto income tax
The ordinary income you receive from mining, staking, interest accounts, or work compensation gets reported on different tax forms, depending on your specific situation.
Schedule 1 - If you earned crypto from staking, airdrops, forks, or other crypto hobby income, it’s generally reported on Schedule 1 as other income. (Not subject to self-employment tax.) Most investors will use this form to report crypto income.
Schedule C - If you earned crypto while operating a business, like receiving payments for contract work, running a cryptocurrency mining operation, or operating a node, this is often treated as self-employment income and is reported on Schedule C. Schedule C also allows you to deduct business expenses such as electricity used for mining.
To make things easier for investors, CoinLedger generates a complete income report that is included with your completed crypto tax reports. This report details the US Dollar value of all of your cryptocurrency income events that you received throughout the year: mining, staking, airdrops, and more. This income report can be used to complete your relevant ordinary income tax forms like Schedule 1 and Schedule C.
TAX FREE
How is buying cryptocurrency taxed?
Buying cryptocurrency with fiat currency is tax-free.
However, you should keep detailed records of your cryptocurrency purchases for tax purposes. If you dispose of your cryptocurrency in the future, you’ll need to know your original cost for acquiring your crypto to calculate your total capital gain.
TAX FREE
Do I pay tax for holding cryptocurrency?
There’s no tax for simply holding cryptocurrency.
TAX FREE
How is transferring crypto between different wallets taxed?
Transferring crypto between wallets that you own is tax-free. However, you may pay taxes on fees paid to transfer your crypto (this is considered a taxable disposal).
You should keep a detailed record of your cryptocurrency transfers so that you can calculate your capital gains and losses in a disposal event. Remember, cryptocurrency transfers often lead to missing cost basis issues on Form 1099-DA.
CAPITAL GAINS TAX
How is selling cryptocurrency taxed?
Selling cryptocurrency is a disposal event subject to capital gains tax. You’ll incur a capital gain or loss depending on how the price of your crypto changed since you originally received it.
Example:
Jordan buys BTC for $1,000.
Later, he sells BTC for $1,500.
Jordan incurs $500 of capital gain ($1,500 - $1,000).
CAPITAL GAINS TAX
Do you pay taxes when spending crypto?
When you spend cryptocurrency to purchase goods and services, you’ll incur a capital gain or loss depending on how the price of your crypto has changed since you originally received it.
CAPITAL GAINS TAX
How are crypto-to-crypto trades taxed?
Trading your crypto for another cryptocurrency is considered a disposal event subject to capital gains tax. You’ll incur a capital gain or loss depending on how the price of the crypto you traded away has changed since you originally received it.
Example:
Jamie buys $1,000 of BTC.
The price of Jamie’s BTC rises to $1,200.
Jamie trades his BTC for ETH.
Jamie incurs $200 of capital gain ($1,200-$1,000).
TAX DEDUCTIBLE
How are crypto losses taxed?
Cryptocurrency losses can be used to offset 100% of your gains from cryptocurrency, stocks, and other assets and up to $3,000 of income for the year. Any additional losses can be rolled forward into future tax years.
Example:
Rachel buys $2,000 of SOL.
The price of Rachel’s SOL drops to $1,500.
Rachel sells her SOL.
Rachel has a capital loss of $500, which she can use to offset income!
Fees related to acquiring your crypto can be added to your cost basis.
Meanwhile, fees related to disposing of your crypto can be subtracted from your gross proceeds.
Example:
Scott buys $300 of BTC and pays $10 of fees.
Scott’s cost basis in BTC is $310.
Later, Scott sells his BTC for $400.
Scott’s incurs a capital gain of $90 ($400 - $310).
Income Tax
Capital Gains Tax
How is mining cryptocurrency taxed?
Cryptocurrency mining rewards are considered income based on the fair market value of your crypto at the time of receipt. When you dispose of your rewards, you’ll pay capital gains tax based on how the price of your crypto has changed since you originally received it.
Mining crypto as a business: If you’re mining cryptocurrency as a business, you can deduct relevant expenses such as the depreciation of your equipment and electricity.
Mining crypto as a hobby: If you’re mining cryptocurrency as a hobby, you are not allowed to deduct relevant expenses.
Cryptocurrency staking rewards are considered income based on the fair market value of your crypto at the time of receipt.
When you dispose of your rewards, you’ll pay capital gains tax based on how the price of your crypto has changed since you originally received it.
Example:
Sara earns $200 of ETH from staking.
The price of her ETH rises to $250.
Sara sells her ETH.
Sara recognizes $200 of income and $50 of capital gain.
Income Tax
Capital Gains Tax
How are airdrops taxed?
Cryptocurrency received from an airdrop is taxed as income. This means that you are liable for income taxes on the USD value of the claimed airdrop.
When you dispose of airdrop rewards, you’ll incur a capital gain or loss depending on how the price of your crypto has changed since you originally received it.
Income Tax
Capital Gains Tax
How are hard forks taxed?
In a cryptocurrency hard fork, a blockchain splits into two and an entirely new cryptocurrency is created. If you receive units of this new cryptocurrency, you’ll recognize income based on the fair market value of your coins at the time of receipt.
Example:
Megan receives 2.5 Bitcoin Cash in a hard fork.
The fair market value of Megan’s Bitcoin Cash is $1,250.
Megan reports $1,250 of personal income.
If you dispose of your forked cryptocurrency in the future, you’ll incur a capital gain or loss depending on how its price has changed since you originally received it.
TAX FREE
How are cryptocurrency soft forks taxed?
Sometimes, a cryptocurrency will need to rebrand or change its architecture for increased functionality. When this happens, the conversion from the old version of the token to the new version of the token is not a taxable event. Similar to a stock split or a company changing tickers on the stock market, the underlying cost basis will carry through into the new asset without triggering a taxable event.
A good rule of thumb is that if you haven’t received any new cryptocurrency as a result of a fork, there is no taxable event.
Income Tax
Capital Gains Tax
How is crypto interest taxed?
Currently, platforms like Gemini offer users interest rewards for holding select cryptocurrencies. Cryptocurrency interest is considered personal income and is taxed accordingly.
When you dispose of cryptocurrency interest rewards, you’ll recognize a capital gain or loss depending on how the price of your crypto changed since you originally received it.
Tax free
Capital Gains Tax
How are cryptocurrency loans taxed?
Today, investors can receive loans using cryptocurrency as collateral from centralized exchanges and decentralized protocols.
Generally, receiving a loan is not considered a taxable event.
However, some DeFi loan protocols use crypto-to-crypto swaps to facilitate loans. It’s possible that these swaps will be considered disposals subject to capital gains tax.
Cryptocurrency exchanges like BitMex and Binance.com have popularized the use of margin and futures trading. The IRS has not yet set forth explicit guidance on how these cryptocurrency transactions should be handled from a tax perspective, but it’s likely that any profits or losses from margin trading will be treated as capital gains and losses.
If you are feeling generous, you can send a cryptocurrency giftto a friend or family member without having to worry about paying additional taxes.
Generally, cryptocurrency gifts are tax-free for all but the most generous gift-givers. Gift taxes are not imposed until the gift-giver has gifted away over $13.99 million dollars in their lifetime. Even then, the gift recipient will never have to pay taxes for merely receiving the gift.
However, if you send a gift or gifts with a fair market value above $19,000 to any individual in a year, you will need to file a gift tax return in addition to your traditional tax returns. This form is for informational purposes and does not mean you will be required to pay taxes on your gift.
TAX DEDUCTIBLE
How are crypto donations taxed?
Crypto donations to registered charities come with multiple tax benefits!
Crypto donations are not considered a taxable disposal.
You can deduct the value of your donation on your tax return!
If you are claiming a deduction larger than $500, you will need to report this on Form 8283.
The amount of your donation that is tax-deductible depends on how long you have held the assets:
for crypto held for less than a year, you can deduct whichever is lower: the cryptocurrencyʼs fair market value at the time of your donation or your cost basis
for crypto held for less than a year, you can deduct whichever is lower: the cryptocurrencyʼs fair market value at the time of your donation or your cost basis for that cryptocurrency
Despite being explicitly designed for transactions, stablecoins are taxedthe same as other cryptocurrencies. You’ll incur a capital gain or loss when you dispose of your stablecoin (though it’s likely that your capital gain will be close to 0).
TAX FREE
How is lost and stolen cryptocurrency taxed?
Lost, stolen, and hacked cryptocurrency is no longer tax-deductible after the Tax Cuts and Jobs Act of 2017. This includes:
Coins lost due to exchange hacks
Coins lost due to wallets being hacked
Coins lost from sending crypto to an incorrect address
In 2022, exchanges like Voyager and Celsius went bankrupt, causing millions of investors to lose access to their cryptocurrency.
Cryptocurrency that is lost after an exchange bankruptcy likely can be treated as an investment loss. However, it’s important to note that claiming these losses means that you relinquish your right to reclaim your assets once the bankruptcy process is over.
Cryptocurrency lending platforms and other DeFi services like Uniswap, Maker, and Compound have exploded in popularity in recent years.
It’s important to remember that the same tax rules that apply to other cryptocurrency transactions apply to DeFi. That means:
Profits from cryptocurrency disposals, such as crypto-to-crypto trades, are taxed as capital gains
Earned cryptocurrency, such as DeFi staking rewards, are taxed as income
It’s important to remember that the DeFi space is constantly innovating. As a result, there are often novel investment arrangements that do not fit squarely into existing tax frameworks.
The full tax implications associated with transactions common to the DeFi landscape are outside of the scope of this piece; however, we discuss them thoroughly in our DeFi Crypto Tax Guide.
Income Tax
Capital Gains Tax
How is adding and removing liquidity taxed?
When you deposit your cryptocurrency in a decentralized liquidity pool, you’ll typically receive LP tokens that represent your position.
At this time, the IRS has not given explicit guidance on how depositing and withdrawing liquidity is taxed. You can take a conservative or aggressive approach depending on your risk appetite.
Conservative approach: Treat withdrawing and depositing liquidity as crypto-to-crypto trades subject to capital gains tax. You’ll incur a capital gain or loss depending on how the price of your crypto has changed since you originally received it.
Aggressive approach: Treat withdrawing and depositing liquidity as non-taxable.
In general, it’s recommended that you take the conservative approach. However, how to report your taxes may vary depending on the specific mechanisms of your DeFi protocol. You should reach out to a crypto tax professional if you’re unsure how to report your liquidity pool transactions.
Income Tax
Capital Gains Tax
How do NFT taxes work?
From a tax perspective, NFTs are treated similarly to cryptocurrencies and are taxed upon disposal.
Buying an NFT with cryptocurrency: Making a purchase with cryptocurrency is considered a disposal. You’ll incur a capital gain or loss depending on how the price of your crypto has changed since you originally received it.
Selling/trading away an NFT: When you dispose of an NFT, you’ll incur a capital gain or loss depending on how its price has changed since you originally received it.
Minting NFTs: If you’re a creator, you’ll recognize income based on the revenue you receive from primary and secondary NFT sales.
The IRS has said that NFTs may be subject to the 28% collectible tax in certain circumstances. It’s possible that ‘profile picture’ and ‘art’ NFTs will be considered collectibles and taxed accordingly.
So far, the IRS hasn’t provided any guidance on how Decentralized Autonomous Organizations (DAOs) are taxed. It’s likely that they’ll be considered ‘flow-through entities’. This means that while the DAO itself won’t pay taxes, individuals recognize income based on their share of the organization’s profits.
How do other countries handle crypto taxes?
Most countries around the world tax cryptocurrencies similarly to the US (though there are minor differences). For more detailed information, check out our guides on various countries below:
Why crypto exchanges can't provide accurate tax forms
Cryptocurrency exchanges like Coinbase, Binance, and others often do not have the ability to provide their users with accurate capital gains and losses tax reports. This is not a fault of the exchanges themselves, it is simply a product of the unique characteristics of cryptocurrencies (namely their transferability).
Because users are constantly transferring crypto into and out of exchanges, the exchange has no way of knowing how, when, where, or at what cost basis you originally acquired your cryptocurrencies. The exchange only sees when crypto appears in your wallet and what the USD value was at the time of the deposit.
The second you transfer crypto into or out of an exchange, that exchange loses the ability to give you an accurate report detailing the cost basis of your cryptocurrencies, one of the mandatory components for tax reporting.
Example: Why is it difficult to report crypto taxes?
Billy buys crypto for $10,000 on Exchange A.
He transfers his crypto to a cold wallet.
Billy sells his crypto for $15,000 on Exchange B.
Exchange B doesn’t know Billy’s original cost basis and can’t provide him with accurate tax records.
As pictured below, Coinbase explained to users how their generated tax reports wonʼt be accurate if any of them transferred crypto into/out of Coinbase. This affects over two-thirds of Coinbase users, which amounts to millions of people who cannot rely on Coinbase’s calculations to prepare their tax forms.
Cryptocurrency tax software like CoinLedgeris built to automate the entire crypto tax reporting process. By integrating directly with leading exchanges, wallets, blockchains, and DeFi protocols, CoinLedger can auto-generate all of your necessary tax reports based on your historical data. You can test out how it works by creating an account for free.
How cryptocurrency tax software can help
Cryptocurrency tax software like CoinLedger is built to automate the entire crypto tax reporting process.
By integrating directly with leading exchanges, wallets, blockchains, and DeFi protocols, the CoinLedger engine can auto-generate all of your necessary tax reports. You can test out how it works by creating an account for free.
How it works
1. Select each of the cryptocurrency exchanges, wallets, and platforms youʼve used throughout the years.
2. Import your historical transactions by connecting your accounts via API or uploading the CSV transaction history report exported by your exchanges. You can double-check your transactions to make sure they’ve been imported correctly. CoinLedger’s error reconciliation system will notify you about any errors.
3. Finally, generate your complete crypto tax reports with the click of a button.
Once youʼve generated your tax reports, you can send them to your tax professional or import them directly into your preferred tax filing software like TurboTax or TaxAct.
You can test out the software yourself by creating a free account here.
How to stay up-to-date on crypto tax news
The entire cryptocurrency ecosystem is still in its infancy. As the industry evolves, further rules and regulations will inevitably come.
Our team tracks every update in the world of cryptocurrency regulation, and we will continue to update this blog post with the latest guidelines from the IRS. You can also follow us on Twitter for real-time updates and tax savings strategies.
CoinLedger has strict sourcing guidelines for our content. Our content is based on direct interviews with tax experts, guidance from tax agencies, and articles from reputable news outlets.
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"acceptedAnswer": {
"@type": "Answer",
"text": "There are some situations where you may need to pay taxes on Bitcoin even if you don’t cash out to fiat. For example, earning Bitcoin interest or trading Bitcoin for other cryptocurrencies would be considered taxable events."
}
},
{
"@type": "Question",
"name": "What happens if I don’t report cryptocurrency on my taxes?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Tax evasion is a federal crime with serious consequences. The maximum penalty is a fine of $250,000 and a prison sentence of up to 5 years. As of 2026, cryptocurrency exchanges issue Form 1099-DA to the IRS, making it easier than ever for the agency to identify tax fraud."
}
},
{
"@type": "Question",
"name": "How do I report cryptocurrency on my taxes?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Cryptocurrency disposals should be reported on Form 8949. For individual investors, cryptocurrency income is reported on Schedule 1."
}
},
{
"@type": "Question",
"name": "How do I calculate my crypto profits?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Remember, capital gain and loss estimates on Form 1099-DA may be inaccurate. You can calculate your capital gains and losses on cryptocurrency through the following formula: Capital Gain/Loss = Proceeds - Cost Basis."
}
},
{
"@type": "Question",
"name": "Do you have to report crypto under $600?",
"acceptedAnswer": {
"@type": "Answer",
"text": "All of your taxable income from cryptocurrency must be reported on your taxes, regardless of the total amount."
}
}
]
}
KNOWLEDGE BASE
Demystify Crypto Taxes
The Ultimate Crypto Tax Guide (2026)
This guide breaks down everything you need to know about cryptocurrency taxes, from the high level tax implications to the actual crypto tax forms you need to fill out.
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