Crypto and Your Taxes
Updated September 17, 2026.
Selling, trading, or spending crypto generally means calculating a taxable gain or a loss. Whether you can deduct a loss depends on how you held the crypto and the tax rules that apply.
The IRS treats crypto as property. Buying it with dollars and simply holding it is not taxable.
Crypto is part of a wider category the IRS calls digital assets, which also includes stablecoins and NFTs. Some assets have additional rules.
Start here
Answer yes to any of these and you may have something to report, either on the digital asset question, as taxable income or gain, or for gift or charitable reporting.
- Did you sell crypto for dollars?
- Did you trade one coin for another?
- Did you buy anything with crypto, even a cup of coffee?
- Were you paid in crypto for work?
- Did you earn mining, staking, or airdrop rewards?
- Did you give crypto away, or donate it?
What counts as a taxable event
| What you did | Tax result |
|---|---|
| Bought crypto with dollars and held it | No |
| Moved coins between your own wallets | Usually no, unless you paid a transaction fee with crypto |
| Sold crypto for dollars | Calculate gain or loss; losses may be limited |
| Traded one coin for another | Calculate gain or loss; losses may be limited |
| Spent crypto on goods or services | Calculate gain or loss; losses may be limited |
| Got paid in crypto for work | Yes, ordinary income |
| Received mining or staking rewards | Yes, ordinary income |
| Received an airdrop | Often ordinary income; gifts and restricted assets need separate review |
The swap is not a like-kind exchange
Trading Bitcoin for Ethereum is a sale of the Bitcoin. Like-kind exchange treatment has applied only to real property for exchanges after 2017, so crypto swaps do not qualify. If you traded coins and never converted to dollars, you may still have gains or losses to report.
Income you receive in crypto
Paid for work: report the value in dollars when you receive it. Employees receive a W-2 with withholding. Contractors have self-employment income. For payments made in 2026, the general Form 1099-NEC reporting threshold is $2,000, up from $600, though special reporting rules can apply. You report taxable income whether or not a form arrives.
Mining rewards are ordinary income at fair market value when received. Mining as a business may also create self-employment tax. For taxpayers using the cash method of accounting, staking validation rewards count as income once you can sell, exchange, or otherwise control them. This includes rewards credited through an exchange.
A hard fork by itself is not income if you receive no new asset. New coins received through an airdrop or reward may be ordinary income when you can sell, exchange, or otherwise control them. Bona fide gifts are different. Unsolicited tiny deposits, sometimes called dust, and assets you cannot control need separate review.
Basis, and why the default can surprise you
Your basis is the tax cost used to calculate gain or loss. If you do not make and document a timely identification of the units sold, the default is first in, first out, or FIFO. That generally treats the earliest units in the relevant wallet or account as sold first. The identification requirements can depend on how the assets are held, so check them before selling.
Keep each unit's acquisition date and time, cost or value already taxed as income, disposal date and time, disposal value, fees, and wallet or account.
Form 1099-DA, and what it does not cover
Brokers report certain digital asset sales on Form 1099-DA beginning with 2025 transactions. Required basis reporting generally starts with 2026 sales of covered assets: generally those acquired after 2025 in the broker's custody and held there until sale. Special reporting methods apply to some stablecoins and NFTs.
A form can have missing or incorrect basis, especially after transfers between platforms. You still report taxable transactions whether or not a form arrives.
The question on page one
Form 1040 asks about digital asset activity. Giving crypto away counts as a disposition for that question even when it creates no taxable income. Simply holding crypto, buying it with dollars, or moving it between your own wallets generally does not require a Yes answer, provided you had no other reportable activity and did not pay a transfer fee with crypto.
Losses
A drop in value alone is not a deduction. You generally need a sale or other completed transaction. Worthlessness, theft, abandonment, and bankruptcy situations need separate review.
Losses on crypto held for personal use generally are not deductible. Crypto held for investment can produce a deductible capital loss, even if you spend it on personal goods.
For individuals, deductible capital losses offset capital gains, then up to $3,000 of ordinary income a year, or $1,500 if married filing separately. The remaining net loss carries forward. Capital sales are generally reported on Form 8949 and summarized on Schedule D.
Gifts, inheritance, and donations
A bona fide gift generally creates no income tax for the recipient when received. Give them your basis records: their gain basis generally carries over from you, while their loss basis can be limited to the value on the gift date.
For 2026, the annual gift exclusion is generally $19,000 per recipient for a gift they can use immediately. Gifts above that amount generally require Form 709, and special rules can require it below that amount. Filing a gift tax return does not necessarily mean gift tax is due.
Inherited crypto generally has a basis equal to its date-of-death value, or the alternate valuation value if the estate validly makes that election.
Donated crypto is a noncash property gift. Form 8283 may be required when total noncash deductions exceed $500. A claimed deduction over $5,000 generally requires Form 8283, Section B, and a qualified appraisal. Exchange screenshots or platform prices do not replace that appraisal.
Before you file
Pull a full transaction history from every exchange and wallet, including ones you stopped using. Match transfers so moves between your own wallets are not counted again as sales, and account for any fees paid with crypto.