Crypto tax essentials

The IRS classifies cryptocurrency as property, so every disposal is a taxable event. Depending on how you earn or spend tokens, you may owe both ordinary income tax and capital gains tax.

Transaction categories

• Buys: Paying fiat currency for crypto establishes cost basis.
• Sells, trades, spending: Trigger capital gains or losses using the difference between proceeds and cost basis.
• Income events: Mining, staking, airdrops, or receiving crypto as payment create ordinary income based on USD value at receipt.
• Forks: Hard fork tokens usually carry zero basis and the USD value becomes ordinary income once you control the new asset.

Cost basis and lot selection

FIFO is the default cost method, but you can use specific identification if you document wallet addresses, transaction hashes, and cost basis for the exact units sold. The crypto calculator currently uses FIFO and will expand to other methods based on demand.

Reporting

Use Form 8949 and Schedule D for capital gains. Ordinary income from staking, mining, or payments belongs on Schedule 1 or Schedule C (if you operate a business). Exchanges will begin issuing Form 1099-DA for 2025 activity—reconcile their records with your own wallet logs to avoid mismatches.

IRS references: Notice 2014-21, Revenue Ruling 2019-24, and draft Instructions for Form 1099-DA.

Keeping clean records

• Export CSV files from every exchange quarterly.
• Tag transfers between your own wallets to avoid double counting.
• Note network fees—they increase basis for buys and reduce proceeds for disposals.

Use the calculator to plan ahead

Log historical trades inside the crypto tax calculator to benchmark your current tax position. Then model future disposals or income events to see how timing, income levels, or loss harvesting change your liability. Export the disposal breakdown for your tax professional.