US Crypto Tax Guide 2026: IRS Rules, Form 8949 and Form 1099-DA

How the IRS Treats Crypto

The IRS digital assets page confirms digital assets are treated as property, not currency. That means capital gains rules apply when you dispose of them.

Watch: Ben Simpson Explains (2 Videos)

How To ACTUALLY Take Crypto Profits (Before It’s Too Late)

Ben Simpson explains taking partial profits on the way up with a written plan.

How To Earn Income On Your Crypto (Without Getting Wrecked)

Ben Simpson explains how staking and other yield works, and the risks to understand first.

Taxable and Non-Taxable Events

• Taxable: selling for dollars, swapping one coin for another, spending crypto, earning staking or mining rewards (as income)
• Usually not taxable: buying with dollars, holding, moving coins between your own wallets

Short-Term and Long-Term Gains

Assets held a year or less are short-term and taxed at ordinary income rates. Held more than a year, they are long-term and usually taxed at lower rates. Your Profit Ladder, step T of the SHIFT Method, should account for this.

Form 8949 and Schedule D

Form 8949 lists each sale with dates, proceeds and cost basis. The totals flow to Schedule D on your Form 1040.

Form 1099-DA

From the 2025 tax year, US brokers report digital asset sales on Form 1099-DA. Check it against your own records, because transfers between platforms can leave cost basis missing.

Records to Keep

Keep the date, amount, dollar value and fees for every buy, sell, swap and transfer. Crypto tax software can import exchange history. See the IRS virtual currency FAQ.

A Worked Example

Say you bought 0.1 BTC and sold it 18 months later for more than you paid. Your gain is the sale proceeds minus your cost basis, which is what you paid including fees. Because you held it for more than a year, the gain is long-term. You list the sale on Form 8949 with both dates, the proceeds and the cost basis, then carry the total to Schedule D.

If you had swapped that Bitcoin for Ether instead of selling for dollars, the swap would still be a disposal, valued at the dollar value of what you received at that moment.

Cost Basis Methods

Cost basis is what you paid for an asset. When you sell part of your holdings, you need a method to decide which coins you sold. First in, first out (FIFO) is the default. Specific identification lets you choose particular lots if you keep adequate records. From 2025, IRS rules require cost basis to be tracked wallet by wallet, so check how your software handles this.

Staking, Mining and Airdrops

Rewards from staking or mining are generally treated as ordinary income at their dollar value when you receive them. That value becomes your cost basis if you later sell. Airdrops can also be income. The rules here change often, so check the IRS digital assets page each year.

Losses Can Help

If you sell at a loss, that capital loss can offset capital gains, and up to an annual limit set by the IRS can offset ordinary income, with the rest carried forward. Keep records of losses as carefully as gains.

The Digital Asset Question on Your Return

Form 1040 asks every taxpayer whether they received, sold, exchanged or otherwise disposed of a digital asset during the year. Answer it accurately even if you only bought and held, since buying alone is usually a no.

Common Mistakes

• Treating coin-to-coin swaps as tax free
• Missing cost basis on coins moved between platforms
• Forgetting staking income
• Ignoring state income tax on crypto gains

Tax on Staking and Yield in Practice

In the second video below, Ben Simpson explains how staking and other yield works and the risks to understand first. For US tax, the key habit is recording the dollar value of each reward on the day you receive it, because that value is both ordinary income and your cost basis for a later sale.

The Crypto Wash Sale Bill

On 16 September 2026, the House Ways and Means Committee voted 38 to 5 to advance the Digital Asset Tax Certainty Act (The Block, 16 September 2026). As reported, it would apply wash sale rules to crypto and exempt small network fees on disposals after 31 December 2027. It is not law yet. Our crypto wash sale guide covers what it would mean.

How Our Team Takes Profits

In the Academy module on goal setting and profit taking, the team starts with a question: what does success look like for you? Growing wealth, beating inflation and paying off a mortgage each lead to a different sell plan. The module also covers stablecoins, which are tokens designed to track the US dollar, as a way to lock in gains without leaving crypto entirely.

In our live cohort on building a sell plan, one example the team shares is taking a third of a position off each time it doubles. The analyst who used it was clear that it is not a crystal ball and not better or worse than a quarter or a half; it is a personal choice. What matters is that the rule is written down before prices move.

A Year-End Tax Checklist

1. Export every exchange and wallet history for the year.
2. Match transfers between your own wallets so they are not counted as sales.
3. Record staking and other rewards at their dollar value on the day received.
4. Check Form 1099-DA from each broker against your own records.
5. Review realized gains and losses before 31 December, not after.
6. Answer the digital asset question on Form 1040.
7. Check your state income tax rules.

Plan Your Exits With Tax in Mind

A written plan makes tax season simpler.