Tax season is already confusing, so adding crypto on top of it can feel overwhelming. But with the rules getting clearer every year, you can stay on the safe side with the IRS by just understanding a few key ideas about what to report and how.
The IRS doesn’t treat cryptocurrencies and tokens as cash or commodities, but as property. That means every time you sell, trade, or even use crypto, it’s potentially a taxable event. This includes selling crypto for fiat money, swapping one token for another, and even using crypto to buy goods or services. In recent years, it has, for example, been popular to use crypto to play at modern casino platforms. It is easy to get started with Telegram casinos online, and there are many benefits to playing with crypto. But if you do so, it’s important to remember that any activity could trigger taxable events that need reporting.
What matters for tax is the difference between your cost basis (what you paid, including fees) and the value when you dispose of the asset. If the value went up, you have a capital gain; if it went down, you have a capital loss.
One of the big changes for this tax year is the implementation of Form 1099‑DA for crypto brokers and exchanges. Starting January 1, 2025, exchanges like Coinbase, Kraken, and Binance.US are required to send this new tax form to both users and the IRS, reporting your gross proceeds from crypto sales or trades. This isn’t the cost basis but just the total amount you got from selling or swapping your crypto.
For tax year 2025 filings (due in 2026), you’ll still have to calculate your own cost basis to figure out gains and losses, but the IRS will already have a record of what you sold. Beginning in 2026, brokers must also report cost basis for certain transactions, making your life easier but also leaving less wiggle room for mistakes.
Once you’ve got your transaction data together, you calculate capital gains or losses. In the U.S., how long you held the asset determines the rate you pay: crypto held for more than one year gets long‑term capital gains tax, which is generally lower (0 %, 15 %, or 20 % depending on income), while crypto held for less than a year is taxed at ordinary income tax rates, which can go up to 37 %.
You must report gains and losses on IRS Form 8949 and then summarize totals on Schedule D of your federal tax return. Each transaction, including its purchase date, sale date, cost basis, and proceeds, should be listed on Form 8949. If you earned income from crypto activities – such as mining, staking rewards, interest from DeFi platforms, or payments for services in crypto – those are generally reported as ordinary income on Schedule 1 or Schedule C.
Failing to report your crypto transactions, even small ones, can have consequences. The IRS treats undisclosed income, including crypto gains under $600, as taxable just like larger amounts. That means no minimum threshold allows you to skip reporting. Ignoring this could trigger penalties, interest, or audit scrutiny. And because exchanges will be reporting your gross proceeds directly to the IRS with Form 1099‑DA, mismatches between what you report and what the IRS expects can lead to notices or enforcement actions.
Finally, don’t forget other reporting obligations. If you hold crypto on foreign exchanges and the value exceeds certain thresholds ($10,000 total at any time during the year), you may need to file the FBAR (FinCEN Form 114) and possibly IRS Form 8938 for foreign financial assets. These aren’t about gains but about disclosing holdings, and failure to file can lead to hefty penalties.