To report cryptocurrency on your tax return, use specific IRS forms based on the type of transactions you’ve made.
Reporting Crypto Sales and Exchanges (Capital Gains and Losses):
- Form 8949: Report each transaction, including the date acquired, sold, proceeds, and gain/loss.
- Schedule D (Form 1040): Summarize your capital gains and losses from Form 8949.
Reporting Crypto Income (Payments, Mining, Airdrops):
- Schedule 1 (Form 1040): Report income from mining, airdrops, or staking.
- Schedule C (Form 1040): For self-employed individuals, report crypto payments and expenses.
Answering the Virtual Currency Question:
- Form 1040: Answer “Yes” or “No” on page 1 about your cryptocurrency activity.
Where to Report Cryptocurrency Transactions
| Crypto Activity | Tax Treatment | Where to Report |
| Buying Cryptocurrency | Not a taxable event | No reporting required (answer “Yes” to virtual currency question) |
| Selling Cryptocurrency | Capital Gain or Loss | Form 8949, Schedule D |
| Receiving Crypto as Payment | Ordinary Income | Schedule C (Form 1040) |
| Mining Cryptocurrency | Other Income (Hobby) | Schedule 1 |
| Staking & Airdrops | Ordinary Income | Schedule 1 or Schedule C (if business) |
Frequently Asked Questions
Do I need to report crypto if I only bought it?
No, if you only purchased cryptocurrency with cash and didn’t sell or exchange it, no reporting is required.
How is crypto received as a gift taxed?
Receiving cryptocurrency as a gift isn’t taxable. However, you must report any gain or loss if you sell or exchange it later.
What records should I keep for crypto transactions?
You should keep detailed records of dates, amounts, fair market values, and the purpose of each transaction.
Do I need to pay taxes if I used cryptocurrency to buy goods or services?
Yes, it’s a taxable event. You need to report it as a capital gain or loss based on the cryptocurrency’s value at the time of the transaction.
Is cryptocurrency staking taxable?
Yes, staking rewards are taxable as ordinary income. Report this income on Schedule 1 or Schedule C if it’s part of a business.
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Where to Pay Crypto Tax?
