In the US, crypto tax is less about how often you trade and more about how well you keep records. Every crypto action, such as buying, selling, swapping, staking rewards, or using crypto to pay for something, can create a taxable event. Tracking each of these manually becomes difficult over time, especially when activity spreads across multiple wallets and exchanges. Because most crypto transactions must be reported to the IRS, accurate recordkeeping is now essential, not optional.
This guide outlines what is considered taxable, where to include Form 8949, how to consider cost basis, and how Crypto Tax software helps reduce the busywork. It also includes a plain-language walkthrough of the form 8949 form (also called the 8949 form) and a section on using a crypto tax calculator for quick checks.
Crypto Tax USA 2026: What Changed and What Stayed the Same
Reporting is the big headline of 2026. The IRS and Treasury have been shifting digital assets into the same type of information reporting that already exists in the case of stocks. Simply put, there will be more taxpayers receiving broker statements that summarize proceeds, and occasionally cost basis, on specific transactions.
In 2025, brokers are required to file Form 1099-DA with customer sales, but not with cost basis of those sales in 2025. Beginning with transactions that occur on or after January 1, 2026, brokers must report both gross proceeds and cost basis on Form 1099-DA for covered digital asset sales. Transactions involving non-covered assets will continue to be reported without cost basis information.
What has not changed is the foundation. IRS continues to treat convertible virtual money as property subject to federal tax, which is why selling, trading or spending it can give rise to a capital gain or loss.
In addition, the Form 1040 “digital assets” question is part of filing. According to the IRS, taxpayers are required to respond to it even when they did not engage in taxable activity, based on how they treated digital assets in the year.
Taxable Vs Non-Taxable Crypto Activity
Most confusion comes from mixing up “something happened in my wallet” with “a taxable event happened.” A good rule of thumb is to focus on disposals and income.
Common Taxable Events
These are the moves that usually trigger Crypto Tax reporting:
- Selling crypto for USD (or any fiat).
- Trading one crypto for another (a swap is still a disposal of the asset you gave up).
- Spending crypto on goods or services (you disposed of the crypto, even if you never touched cash).
- Getting paid in crypto for work, services, or as a reward/award.
- Receiving staking, mining, or other rewards that count as income.
The IRS digital assets guidance focuses on calculating gain or loss, determining cost basis, and reporting on the right form when you dispose of digital assets.
Common Non-Taxable Events
These moves can still matter for recordkeeping, but they usually do not create a tax bill by themselves:
- Buying crypto with USD and holding (no disposal yet).
- Transferring a digital asset between wallets or accounts you own or control. The IRS instructions list this as an example that does not count as receiving or disposing for the digital assets question.
If you are not sure where something falls, treat it like a bookkeeping question first: what did you receive, what did you give up, and what was the fair market value at the time?
The IRS Forms You’ll See in The 2026 Filing Season
Crypto Tax paperwork looks scary mostly because it is spread across a few places.
The “Digital Assets” question on Form 1040
For the 2026 filing season, taxpayers must answer the digital assets question on Form 1040 if they had any crypto activity at any point during 2025. The IRS instructions also explain when the correct answer is “No”, such as when you only held crypto or moved it between wallets you control.
One important point to note is that receiving Form 1099-DA does not change this requirement. You must still answer the digital assets question on Form 1040, even if a broker reports your activity separately.
Form 1099-DA (newer broker reporting)
Form 1099-DA is a more modern information return of digital asset dispositions. Treasury and the IRS published the digital assets broker reporting rules, based on the reporting on Form 1099-DA.
It is a starting point, not a final number. Use it to compare the broker-reported figures with your own records from exchanges and wallets. This helps you check for missing transactions, incorrect dates, or wrong cost basis before you file.
Form 8949 and Schedule D (capital gains and losses)
Most crypto investors report their real capital gains on Form 8949. The IRS discusses how you use Form 8949 in connection with sales and other dispositions of capital assets, and the amounts you have transferred to Schedule D.
You will see this explained in plain language throughout IRS tax education materials and directly in Form 8949. On this form, you list the details of each crypto disposal, including the date, proceeds, cost basis, and resulting gain or loss. Form 8949 separates disposals into short-term and long-term transactions, based on how long the asset was held.
The totals from each section of Form 8949 then flow into the matching sections of Schedule D, where your overall capital gains and losses are calculated.
When you generate a Form 8949 report using crypto tax software, it is usually structured to match the IRS format. This helps ensure transactions are categorized correctly, and totals transfer cleanly to Schedule D.
Schedule 1 (Crypto Income)
Not every Crypto Tax is a capital gains tax. The IRS guidelines indicate that reporting will be on some income of digital assets (not reported elsewhere) on Schedule 1, Line 8v.
This is where you may have staking rewards, mining income, or be paid in crypto, depending on your situation.
How Crypto Gains and Losses Are Calculated?
The math itself is not complicated. The hard part is getting clean inputs.
Here’s the core idea:
- Proceeds: what you received when you disposed of the crypto (often measured in USD value at the time).
- Cost basis: what you paid for the crypto (also in USD value at the time you acquired it), plus certain adjustments.
- Gain or loss: proceeds minus cost basis.
The IRS guidance breaks this down as calculating capital gain or loss, determining cost basis, and then reporting on the correct return.
Short-term vs long-term matters
Holding period can change how gains are taxed. The IRS FAQ explains that a disposition can be short-term or long-term depending on how long you held the digital asset.
You do not need to memorise rates to do the reporting. You do need clean dates, because holding period depends on when you acquired and disposed of the asset.
Crypto Income: Rewards, Payments, And Other “I Got Coins” Moments
A lot of people assume “income” only means a paycheck. With Crypto Tax, income can show up in more places, and it can stack with future capital gains.
Here are the common patterns:
- You receive crypto as a reward/payment: you may have ordinary income at the fair market value when you received it.
- Later you sell that crypto: you then have a capital gain or loss based on the difference between the sale proceeds and your cost basis (which is often the value you already reported as income).
The IRS FAQs apply existing tax principles to digital asset transactions, which is why documentation matters even for “small” activity.
Recordkeeping That Makes Crypto Tax Less Painful
If Crypto Tax feels hard, it is often a recordkeeping problem, not a tax law problem. The IRS guidance stresses keeping records and calculating your gain or loss and cost basis.
A simple checklist helps:
- Dates: when you acquired and disposed of each asset.
- Amounts: units in and out, plus fees.
- USD values: fair market value at the time of each taxable event.
- Source: exchange, wallet, or platform for each transaction.
- Purpose tags: trade, spend, reward, payment, transfer, and so on.
Being able to explain how a number on your 8949 form was calculated is what matters.
If you can’t reconcile a trade, flag it and move on. Later, check missing deposits, bridge activity, or fees. Small gaps add up fast too.
New Reporting In 2026: Form 1099-DA And What Taxpayers Should Do with It
Form 1099-DA is the IRS information form of Digital Asset Proceeds of Broker Transactions. More taxpayers will begin to use these forms in 2026 to report past-year sales.
Two practical points matter:
- When the sales are made in 2025, the brokers are to report the gross proceeds on Form 1099-DA, however, the cost basis reporting is not obligatory in the case of such 2025 sales.
- Cost basis reporting of covered digital assets starts to be compulsory as sales of covered digital assets occur on or after January 1, 2026, and cost basis reporting of noncovered assets does not occur (but voluntary reporting may occur).
A 1099-DA must not be the end, rather it should be the beginning of a taxpayer. It might not have non-custodial wallet activity, DeFi activity, or older lots that were obtained elsewhere. It is there that a good crypto tax calculator or crypto tax software can assist in organizing records.
Crypto Tax software: What It Really Does (And What It Can’t)
Many businesses and individuals reach for crypto tax software because manual spreadsheets break down fast once there are multiple exchanges and wallets. The best crypto tax software is usually the one that matches how complex the person’s activity really is.
For teams evaluating best crypto tax software, the fastest test is a small sample import. If the tool reconciles transfers and produces a clean Form 8949 export, it fits well today.
What Good Crypto Tax Software Can Do
- Import transactions via API, CSV, or manual entries
- Identify duplicates and transfers between owned wallets
- Track cost basis lots across exchanges
- Separate capital activity from income activity
- Produce a Form 8949 export or a report that maps to it
CRPTM’s own product pages describe free data import options and report previews for tax liability and reports.
Where Software Still Needs Human Input
Software cannot read minds. When the exchange deposit originated out of a private wallet, the tool still requires the acquisition history to compute cost basis. In case a token migrated, wrapped, or was split into a chain, the taxpayer might need to mark transactions in such a way that the report is readable.
Free Crypto Tax Calculator from CRPTM
CRPTM identifies itself as crypto tax software and a crypto tax calculator that can generate and calculate tax reports with a single click, and it has a dedicated crypto tax calculator page that outlines that workflow.
It also outlines general exchange support and the capability to link up accounts that is important in case your transactions are far between. When choosing between two, the difference between running a seamless installation and a week of repairing a spreadsheet is frequently that can connect to many platforms.
Common Crypto Tax Mistakes That Cost Time (And Sometimes Money)
Most Crypto Tax problems are avoidable, but they’re also very common. A quick scan here can save hours later.
- Forgetting crypto-to-crypto trades: swapping is still a disposal, even if you never cashed out.
- Ignoring fees: fees can change proceeds and cost basis.
- Mixing up transfers and sales: transfers you control are different from sending to someone else.
- Relying only on one exchange statement: activity across multiple platforms can leave gaps.
- Answering the Form 1040 digital assets question incorrectly: read what it asks, not what you wish it asked.
- Assuming 1099-DA equals “done”: 1099-DA helps, but reconciliation still matters.
A Simple 2026-Ready Checklist for Businesses and Investors
For a taxpayer who wants Crypto Tax to feel manageable, the checklist is boring by design:
- Keep one place for transaction history (exchange exports, wallet logs, DeFi activity).
- Track transfers between owned wallets so the data does not “break.”
- Keep notes for unusual events (airdrops, forks, token migrations).
- Reconcile broker forms like 1099-DA against full activity.
- Use a crypto tax calculator for spot checks, then use a full report for Form 8949 when activity is large.
Conclusion
Crypto Tax becomes manageable when your documents are organized and your filing is comparable to the IRS reports. Need something that can get you to an IRS-ready 8949 form faster and have a clear overview? CRPTM has a free crypto tax calculator that can help you see all your data in one place and generate tax reports that you can review before submitting.
FAQs
Do people pay Crypto Tax if they only bought and held?
Buying digital assets with real currency and holding them is not a taxable disposal. The IRS lists this as an example of activity that does not require a “Yes” answer to the digital assets question by itself.
Are transfers between personal wallets taxable?
No. Moving digital assets between wallets or accounts that you own or control is not a taxable event and does not count as receiving or disposing of digital assets.
Where do capital gains from crypto get reported?
Disposals are typically reported on Form 8949, with totals carried to Schedule D.
Where does crypto income get reported?
The IRS instructions point to reporting certain digital asset income on Schedule 1, Line 8v, depending on the type of income and whether it’s reported elsewhere.
What is the difference between the form 8949 form and Schedule D?
Form 8949 is the detailed list of sales and exchanges. Schedule D is the summary page that totals gains and losses.
If someone receives a Form 1099-DA, do they still answer the digital assets question?
Yes. The IRS Form 1040 instructions say that even if you receive Form 1099-DA, you still must answer the digital assets question.
