Updated (2026)

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Your digital asset exchange reported your 2025 crypto transactions to the IRS. Did you?

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The first question on IRS Form 1040 after your personal data is whether you transacted in digital assets. Specifically: “At any time during the year, did you: (a) receive (as a reward, award, or payment for property or services), or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”

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Tip: Buy BTC = “no” – you did not receive or dispose of. Receive BTC reward = “yes”.

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Beginning January 1, 2025, digital asset exchanges, brokers, and hosted wallet providers are required to report digital asset / crypto sale transactions to the IRS and provide customers with Form 1099-DA by mid-February 2026.

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What is Form 1099-DA (Digital Asset Proceeds from Broker Transactions)?

Form 1099-DA is the IRS form used by cryptocurrency exchanges and hosted wallet providers to report proceeds and transaction dates from sales or exchanges of crypto, NFTs, and stablecoins.

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Will I receive a 1099-DA?

If you sold cryptocurrency, received crypto as payment, or earned rewards from mining and staking you may receive a 1099-DA in early January for tax reporting by April.

 

When will I receive my 1099?

In early January for each prior year’s transactions.  

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Will the Exchange report my purchase price?

Starting January 1, 2026, centralized exchanges and digital asset brokers must also track and report what you originally paid for your crypto – your cost basis.

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Can I reduce my digital asset tax bill?

You may be able to manage your tax bill by tax-loss harvesting crypto losses, donating your cryptocurrencies, and holding for more than one year (long- vs short-term capital gains).

 

What forms do I need to report digital assets to the IRS?

Required IRS forms  may vary if you are filing as an individual, corporation, partnership or other entity.  As an individual, first answer the question on Form 1040. Then, depending on the type of transaction:

• Form 8949 Sales and Dispositions of Capital Assets à Schedule D Capital Gains & Losses.

• Schedule C – Profit or Loss from Business, if you are paid or receive digital assets as payment for goods or services.

 

When do I need to report staking rewards ?
Please consult your tax specialist, as this is nuanced!

The U.S. Tax Court established in Paschall v. Commissioner, T.C. Memo. 2026-46, that cryptocurrency staking rewards are taxable as gross income upon receipt – not upon disposition (sale). According to the IRS and the court ruling, if you receive crypto as a staking reward the FMV (fair market value) of the reward is treated as income in the year you obtain “dominion and control” = the ability to transfer, sell, exchange, and must be reported whether you sell it or not.

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Knowing the potential tax implications of digital asset / crypto transactions

should be a part of your investment strategy.

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I live outside the U.S., does this apply to me?

Cryptocurrencies are taxed differently across countries, as well as within a country depending on whether it is an investment or income. In the U.S., for example, tax is paid on capital gains at sale as the IRS considers cryptocurrencies “property” rather than currency.  

 

 

In the U.K., as in the U.S., cryptocurrencies are generally recognized as a form of property and you may owe capital gains tax when selling, exchanging, or gifting if your total gain exceeds the tax free allowance (CGT annual exempt amount). Rewards from mining and staking, and cryptocurrency received as payment for services is generally taxed as taxable income. In contrast, in the Netherlands, the “presumed increase in value” of crypto may be taxed even if not sold.

 

 Always confirm the tax treatment of transactions given your tax-residency status.

 

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The IRS has issued new guidelines on cryptocurrency and pledged "fair enforcement against those who don't follow the rules." Keeping detailed records of the fair market value of all receipts, sales and exchanges of virtual currency is critical for compliance with tax rules.

 

The IRS has issued new guidance for taxpayers who engage in virtual currency transactions. The information is presented at Frequently Asked Questions on Virtual Currency Transactions.

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The FAQ expands upon the examples provided in IRS 2014 Notice on Virtual Currency (PDF).

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The IRS also issued a new Ruling answering the question:

 

Does a taxpayer have gross income as a result of a hard fork or airdrop?

 

Revenue Ruling 2019-24 clarifies, with examples, when a taxpayer does and does not have gross income. Reporting requirements are set forth in detail in the 2014 Notice which established that virtual currency would be treated as property (a capital asset) for Federal income tax purposes, meaning capital gains rules apply (IRS Capital Gains and Losses).

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Make certain you are in compliance to avoid penalties    

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Unlike traditional investments you hold with a brokerage firm or bank, you generally will not receive a 1099 tax document (1099-k) for your cryptocurrency transactions as you do for dividends (1099-DIV) and interest (1099-INT).

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So, even if you gave your accountant all your 1099 and other income documents you may have missed your cryptocurrency transactions.

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If you fail to report you could be liable for tax, penalties and interest. 

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In July 2019, the IRS began mailing educational letters to more than 10,000 taxpayers making clear that taxpayers who did not report transactions involving virtual currency or who reported them incorrectly may, when appropriate, be liable for tax, penalties and interest.

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Please check with the professional who prepares you income tax return, your tax specialist or accountant to ensure you have complied. 

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Remember to keep detailed records of all receipts, sales, and exchanges of virtual currency, and the fair market value of each transaction. 

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