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- You must report digital asset transactions whether or not they result in a taxable gain or loss, the IRS says.
- For sales after 2025, brokers must report gross proceeds on Form 1099-DA, and basis for digital assets that are covered securities.
- A digital asset is a covered security only if it was acquired after 2025 in an account where the broker provided custody and held there until sold.
Crypto reporting used to rely almost entirely on traders’ own records. That is changing: brokers now send a dedicated form, Form 1099-DA, and from sales made in 2026 some of those forms include cost basis. The form helps, but it does not do the job for you. The IRS is clear that you must report all taxable digital asset transactions, regardless of the amount or whether you receive a 1099.
Step 1: the digital asset question
Form 1040 asks every filer whether, at any time during the year, they received digital assets as a reward, award or payment, or sold, exchanged or otherwise disposed of a digital asset. The IRS says to answer yes if you received crypto for services, as a reward, from mining or staking or from an airdrop after a hard fork, or if you disposed of crypto for dollars, for another digital asset, for goods or services, or by paying a transfer fee in crypto.
You answer no if you only held crypto, only bought it with dollars without selling, or only moved it between wallets you own without paying a fee in crypto, according to the IRS. Checking yes does not by itself mean you owe tax; it means you have transactions to report.
Step 2: Form 1099-DA from brokers
Form 1099-DA, Digital Asset Proceeds From Broker Transactions, is how brokers report sales. Under the IRS instructions for 2026 and beyond, brokers must report gross proceeds for all digital asset sales and must report basis for digital assets that are covered securities. For noncovered securities, reporting basis is voluntary.
| Your asset | Proceeds on 1099-DA? | Basis on 1099-DA? |
|---|---|---|
| Bought after 2025 on a custodial platform and sold there | Yes | Yes, it is a covered security |
| Bought before 2026 | Yes, if sold through a broker | Not required |
| Transferred in from another wallet or platform | Yes, if sold through a broker | Not required |
| Certain stablecoins and NFTs under optional methods | Reporting rules differ | Not required |
The covered security definition is narrow. The IRS instructions say a digital asset is a covered security only if it was acquired after 2025 in an account for which the broker provided custodial services and was held in that account until the broker sold it. Anything that moved between platforms, or that you bought earlier, is likely to arrive with proceeds but no basis.
Tip: When a 1099-DA shows proceeds without basis, the IRS still expects you to report the correct basis from your own records. Without them, the full proceeds can look like profit.
Step 3: Form 8949 and Schedule D
Sales, swaps and other dispositions of crypto held as an investment go on Form 8949, Sales and Other Dispositions of Capital Assets. The IRS explains that the subtotals from Form 8949 carry over to Schedule D, where gain or loss is figured in total. Each line needs the description, dates acquired and sold, proceeds, basis and gain or loss, split between short-term (held one year or less) and long-term (more than one year).
Step 4: crypto income
- Pay from an employer in crypto counts as wages; the IRS says its fair market value at receipt is subject to income and employment taxes.
- Crypto received as an independent contractor is generally self-employment income at its fair market value when received, according to the IRS FAQ.
- Staking rewards and airdrops after a hard fork are income at fair market value when you gain control of them, under IRS rulings.
- Whatever you include in income becomes your basis in those coins for a later sale.
The records you need
The IRS requires records that document each purchase, receipt, sale, exchange or other disposition, and the dollar value of any crypto received as income. To figure gain or loss you need the date and time acquired, basis, the date and time sold, and fair market value at the time of the transaction.
If you hold the same coin bought at different prices, the IRS allows specific identification of the units sold, if your records show when each unit was acquired, its basis and its value at acquisition. Without specific identification, units are treated as sold first in, first out.
A year-end routine
- Download transaction histories from every platform and wallet before accounts close or change.
- Match transfers between your own wallets so they are not mistaken for sales.
- Fill in basis for anything your 1099-DA reports without it.
- Separate income events (staking, pay) from sales and swaps.
- Keep the records with your return.
Which events are taxable in the first place is covered in Crypto Taxes in the US: What Is Taxable and How Much. Fees affect both basis and records; see Crypto Exchange Fees Explained: Every Cost Between Buying and Selling. For long or complicated histories, a tax professional with digital asset experience can help reconcile the forms with your records.