Crypto Tax Guide 2025: How to File Your U.S. Crypto Taxes

For April 15 2025 Deadline

Welcome to Moonscape's 2025 Crypto Tax Guide! Tax season is upon us, and if you hodled, traded, or earned any crypto in 2024, it’s time to appease Uncle Sam. Don’t panic though, we’ve got you covered with a friendly, step-by-step guide to filing your crypto taxes for the 2024 tax year (due April 15, 2025). We’ll explain how different crypto activities are taxed, how to file, which IRS forms you need, and how to avoid common pitfalls. We’ll even sprinkle in a bit of humor to make this journey slightly less painful. Let’s dive in!

How the IRS Views Cryptocurrency (Tax Basics)

Before we jump into specific activities, let’s cover the basics. In the eyes of the IRS, cryptocurrency is treated as property, not as currency. This means general tax principles for property transactions (like stocks or real estate) apply to crypto

Taxable Gains vs. Income: If you sell or trade crypto held as an investment, it’s typically subject to capital gains tax – you owe tax on the profit (or can deduct the loss) based on the difference between what you paid (your cost basis) and what you got when disposing of it. On the other hand, if you receive crypto as payment or reward, it’s taxed as ordinary income at the coin’s fair market value when you received it.
Cost Basis: This is essentially the original value of your crypto for tax purposes. For purchased crypto, your cost basis is what you paid in USD, including fees. If you received crypto as income (through staking, mining, airdrop, etc.), your basis is the fair market value of the coins at the time you acquired them as income. Keeping good records of your cost basis for each acquisition is crucial.
Fair Market Value: Fair market value (FMV) means the USD price of the crypto at a given time. You’ll use FMV at the time of a transaction to calculate gains or income. For example, if you bought 0.1 BTC for $2,000 and later sold it for $3,000, your cost basis is $2,000 and your FMV at sale is $3,000 – resulting in a $1,000 capital gain.
Short-Term vs. Long-Term: Just like stocks, crypto held for more than one year before selling qualifies for long-term capital gains tax rates (which are generally lower, 0%/15%/20% depending on your income). If you held for one year or less, it’s a short-term gain, taxed at your ordinary income tax rate (which can be as high as 37%). In other words, the IRS rewards your diamond hands – long-term hodlers get a tax break on gains.
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“Digital Assets” Include… The IRS uses the term “digital assets” to include cryptocurrency, stablecoins, and NFTs (non-fungible tokens). So all of these fall under the same general tax rules. Keep that in mind as we discuss various activities.

Do I Need to Report My Crypto? (Taxable vs. Non-Taxable Events)

One of the first questions on IRS Form 1040 asks if you engaged in any digital asset transactions during the year. In plain English: Did you do anything with crypto or NFTs in 2024? You must check “Yes” or “No.” This question applies to everyone filing a tax return, not just crypto enthusiasts. Answering it correctly is important, because it flags to the IRS whether you might have crypto-related income or gains to report.

Not every crypto move is taxable – some actions have no tax impact and can be answered as “No” on that 1040 question. Other actions are taxable events that need to be reported (“Yes”). Let’s break it down:

✅ Taxable Crypto Events (Answer “Yes”): You’ll generally check “Yes” if you did any of the following in 2024:
- Selling crypto for USD: Cashing out crypto to dollars triggers a taxable event – you must report any capital gains or losses.
- Trading one crypto for another: Swapping Bitcoin for Ether, or any crypto-for-crypto trade, is treated as selling one asset to buy another. This is also a taxable disposition (even though no fiat money is involved!).
- Spending crypto on goods or services: Using crypto to buy a cup of coffee or an NFT, or paying for any service in crypto, is considered disposing of your crypto. It triggers capital gains or losses just like a sale.
- Receiving crypto as payment: If you were paid in crypto for work or services, or received crypto as a reward/bonus, that’s taxable income (at the coin’s value when you got it).
- Staking rewards: Crypto earned from staking (proof-of-stake rewards) is taxable income when it hits your account – essentially like earning interest or a reward.
- Mining rewards: Crypto you mined (proof-of-work mining) is income upon receipt of the coin reward.
- Airdrops: Free coins/tokens received from airdrops (or hard forks) are income when you have control over them.
  . (Yes, even surprise “free” tokens from the sky have tax implications!)
- NFT sales: Profits from selling an NFT are taxable. If you created (minted) an NFT and sold it, that income needs reporting; if you sold an NFT you previously bought, that’s a capital gain or loss event.
- Conversions/Swaps: Converting one token to another (e.g. using a DEX to swap tokens) is taxable, as it’s essentially the same as trading crypto-for-crypto.
- Any other disposition: Basically, any time you dispose of a digital asset – by selling, trading, spending, or gifting large amounts – it likely has to be reported.
❌ Non-Taxable Crypto Events (Answer “No” if these were all you did): You can check “No” on the 1040 question if you only did things like:
- Buying crypto with cash: Purchasing cryptocurrency or NFTs with U.S. dollars (and just holding them) does not by itself trigger taxes. (You’re just investing, you haven’t realized any gain yet.)
- Holding crypto: Simply holding or HODLing crypto in your wallet without selling or earning more is not a taxable event. No “unrealized gains” tax in the U.S. – you’re only taxed when you sell or dispose of the asset.
- Transferring crypto between your own wallets: Moving coins from Exchange A to your personal wallet or between your own wallets is not taxable. You still own it, so there’s no sale. (Just be careful with transfer fees – if you paid a fee in crypto, that part is considered a disposal of that fee amount. For example, spending 0.001 ETH as a gas fee is technically a tiny taxable event on that 0.001 ETH.)
- Minting NFTs: Creating an NFT (minting) itself isn’t a taxable event until you sell it. (The IRS cares when money or value changes hands, not when you simply create a digital asset.)
- Gifting crypto (under the limit): Gifting crypto to someone is generally not an income-taxable event for you or the recipient. As long as you gave under the annual gift tax exclusion ($18,000 per recipient for 2024) no gift tax forms are needed. (If you were super generous and gifted more than $18k worth to someone, you’d have to file a gift tax return, Form 709, but still no income tax for either party on the gift itself.)
- Donating crypto to charity: Donating crypto to a qualified charity isn’t taxable – in fact, it can be tax-deductible if you itemize deductions. Donations of crypto are treated like donating appreciated property: you generally get a charitable deduction for the fair value and don’t owe capital gains tax on the donation. (If the donation is large—over $5,000—you need a qualified appraisal to claim the deduction.)

In summary, if you did any taxable events in the first list, you must check “Yes” on that IRS question and report the details. If you only bought crypto with fiat, only held it, or only moved it between your own accounts (and did nothing else with it all year), you can confidently check “No”.

Pro Tip: Even if you didn’t make a profit, you still report the transactions. There’s no minimum threshold – even a $10 crypto trade or airdrop needs to be reported. The IRS is increasingly monitoring crypto, so don’t assume small activity flies under the radar.

Now, let’s go through each common crypto activity and explain how it’s taxed (or not taxed).

Buying Cryptocurrency (with USD)

Buying crypto with dollars is the starting point for many. The good news: purchasing crypto with fiat currency (USD) in itself is not a taxable event. When you buy coins on an exchange or mint an NFT using cash, you’re simply exchanging one form of property (cash) for another (crypto). The IRS doesn’t treat that as a gain or income.

However, you should keep records of your purchases:

Note the date, amount of crypto, purchase price in USD, and any fees. This establishes your cost basis in the asset. For example, if you bought 1 ETH for $2,000, your cost basis is $2,000 (plus maybe $50 fee, so $2,050 total basis).
This cost basis will be used later to calculate gain or loss when you sell or trade the crypto. Accurate records now will save you headaches at tax time.

Also, buying crypto with USD does not even require a “Yes” on that 1040 crypto question. If you only bought and held crypto all year and didn’t sell or earn any, you have nothing to report income-wise (you’d answer “No”). Just be ready to report in future when you do sell.

What about stablecoins or converting cash to stablecoin? Buying a stablecoin (like USDC, USDT) with USD is likewise not taxable. Stablecoins are digital assets too, but purchasing them with dollars is treated as buying property. Again, record your cost (usually $1 per coin for stablecoins).

(One caveat: If you buy crypto using another crypto (say, buying ETH with Bitcoin), that is taxable – because you disposed of one crypto. More on that later. Only purchases with real currency like USD are non-taxable acquisitions.)

Selling or Trading Crypto (Capital Gains & Losses)

Selling cryptocurrency for USD is the most common taxable event for crypto users. When you sell, you incur a capital gain or loss. This is calculated as:

Proceeds (what you received in USD)

– (minus)

Cost Basis (what you originally paid for the crypto)

If the result is positive, you have a capital gain – you made money, congrats (now pay taxes on it)!
If it’s negative, you have a capital loss – you lost money (which, silver lining, can reduce your taxes).

For example, if you bought that 1 ETH for $2,000 and sold it later for $3,000, you have a $1,000 gain to report. If you sold for $1,500 instead, you have a $500 loss.

Trading one crypto for another (crypto-to-crypto trades or conversions) follows the same rule. The IRS treats it as if you sold Crypto A for its market value, then immediately used that to buy Crypto B. You calculate gain/loss on Crypto A based on its value at the trade. Yes, even swapping Bitcoin for Ethereum is taxable, even though no cash changed hands. Many newcomers mistakenly think “I only traded into another crypto, so no tax until I cash out to USD” – unfortunately, that’s wrong. Every trade is a taxable event in the U.S.

Using crypto to buy something (spending crypto) is also treated as a sale of that crypto. If you use 0.1 BTC to buy a used car, that’s as if you sold 0.1 BTC for its USD value and then gave the cash to the seller. You have a gain/loss on the 0.1 BTC based on its value vs your basis. Even buying a $5 coffee with crypto triggers a small taxable event! So if you’re frequently spending crypto on daily purchases, you could be racking up lots of tiny reportable transactions (each with its own gain/loss). Currently, there’s no de minimis exemption – every taxable disposal must be reported, no matter how small.

Short-Term vs Long-Term: Remember, if you held the crypto for over a year before selling/trading/spending, it’s a long-term capital gain (usually taxed at a lower rate). If you held for a year or less, it’s short-term (taxed at regular income rates). The holding period generally starts the day after you acquired the crypto and ends the day you dispose of it.

What about capital losses? If you had a losing year (and many crypto traders have felt the pain of market swings), note that capital losses can offset your gains. Net losses up to $3,000 can also offset your other income for the year, and any additional losses carry forward to future years. So don’t ignore your losses – claiming them can save you money. There’s currently no “wash sale” rule for crypto written into law, so selling at a loss and rebuying the same crypto (to harvest a loss) is not prohibited as it is with stocks. (Be aware this could change in the future, but for 2024 it’s allowed.)

Reporting sales and trades: You’ll report each taxable sale/trade on IRS Form 8949 and summarize on Schedule D of your tax return. More on forms in a later section, but just know that detailed records of each trade (date, amount, proceeds, cost basis, gain/loss) will be needed for tax filing. A crypto tax calculator (like Moonscape 😉) can automate this process.

Earning Crypto: Staking, Interest, and DeFi Yield

If your crypto balance grew not just from price changes but because you earned new crypto, that new crypto is typically taxable as income. Here we include things like staking rewards, DeFi lending interest, yield farming rewards, crypto savings interest, etc. The IRS treats these kinds of earnings similar to getting interest on a bank account or receiving a bonus in crypto.

Staking Rewards: If you participate in proof-of-stake networks (either directly running a validator or through an exchange staking program) and you receive rewards in crypto, those rewards are considered ordinary income. The taxable amount is the fair market value of the reward tokens at the time they are credited to you. For example, if you staked some ETH and earned 0.05 ETH over the year, and each time you received a payout you recorded the USD value, you’d add those up as income. The IRS clarified in 2023 that staking rewards are taxable in the year you gain control of them (i.e., when they hit your wallet).
Crypto Savings Interest / DeFi Lending: Maybe you deposited stablecoins or other crypto in a lending platform or DeFi protocol (like earning interest on USDC or yield on a liquidity pool). Those interest or reward payments (whether they’re paid in kind or in another token) are also income. If you got 100 USDC interest over the year, that’s $100 of ordinary income. If you provided liquidity and got reward tokens, those tokens’ value on receipt is income. Essentially, any sort of yield or reward in crypto is income at the moment you receive it.
Yield Farming / Liquidity Mining: Some DeFi protocols give you reward tokens (like governance tokens) for providing liquidity or other activities. Those tokens are taxable income too. Often these come as airdrops or rewards periodically – each time, note the value and treat it as income.
How to report staking/yield income: Typically, you’ll total up all such crypto income (in USD value) for the year. If you received any Form 1099-MISC from a crypto exchange or platform for staking or interest (some platforms issue 1099s if rewards exceed $600), that form will show an amount of income reported to the IRS. Make sure it matches what you have. You’ll report this income on your Form 1040. Usually it goes on Schedule 1 (Additional Income) as “Other income”, unless you’re running a business (more on that shortly). The key is to report it in the year received, just like bank interest.
Cost basis of earned coins: Important – when you later sell the coins you earned via staking or interest, you will calculate gain/loss using the income value as your cost basis. For instance, if you got 0.05 ETH as staking income when it was worth $100, you report $100 income. Now your basis in that 0.05 ETH is $100. If you eventually sell it for $150, you’ll have $50 capital gain then. Keeping records of the value at receipt is critical so you don’t double-tax yourself (once as income, again as gain only on any appreciation after receipt).

(Advanced note: If you operate a staking business or do it as a self-employed activity, you might report income on Schedule C and be able to deduct certain expenses. But most casual stakers will just report as other income.)

Mining Cryptocurrency

Mining (proof-of-work) was one of the original ways to earn crypto, and it has specific tax implications:

Mining Income: When you successfully mine a block or part of one (through a pool) and receive a block reward (plus any transaction fee rewards), the value of the crypto you receive is taxable income to you at that moment. For example, if you mined 0.1 BTC and on the day you received it it was worth $3,000, you have $3,000 of income. Even if the price changes later, you realized income upon mining the coin.
Hobby vs Business: If you mine as a business (for example, you have a mining rig and regularly engage in mining for profit), you would report the income on Schedule C (business income) and you can deduct expenses like electricity, hardware depreciation, equipment costs, etc. Your net profit would be taxable and also subject to self-employment tax. If you mine casually as a hobby, you still must report the income (likely on Schedule 1 as other income). Unfortunately, hobby expenses aren’t deductible for tax purposes, so many serious miners treat it as a business.
Subsequent Sales: After mining, if you hold the coins and later sell them, that sale will be a capital gain or loss. Your cost basis is the income you recognized at mining time. So if you mined a coin at $100 value and later sold it for $150, you have a $50 capital gain then.

Mining can lead to a hefty tax bill if you mined a lot of crypto that you haven’t sold – you owe income tax on the value at receipt even if you continue to hold the coins (and even if the value later dropped). Plan ahead for that by setting aside some crypto or cash to cover the taxes. The IRS has been clear on mining since as far back as 2014: it is taxable like earning business income.

Airdrops and Forks

Airdrops (and hard forks that grant new coins) are often happy surprises for crypto holders – but the IRS treats them as taxable income when you receive them.

If a new token was airdropped into your wallet (for example, governance tokens, promotional airdrops, or forked coins from a blockchain split), you owe taxes on its value at the time you gain dominion and control over it (i.e. when it’s delivered and you can trade it). This was clarified in IRS Revenue Ruling 2019-24 which specifically addressed hard forks and airdrops.
Example: You held some XYZ coin and in 2024 the project did an airdrop of 100 new tokens to all XYZ holders. Suppose when you received them, each was worth $5 (so $500 total). Even if you didn’t sell them, you have $500 of taxable income for 2024 because of the airdrop. If you later sell them, any change in value after the airdrop would be a capital gain/loss.
Airdrops are reported as ordinary income. Depending on context, you’d put it on Schedule 1 (as other income) unless it’s related to your business. Many exchanges don’t issue 1099s for airdrops, so it’s on you to report this. Keep an eye on any surprise tokens that appeared in your wallet – yes, even those weird meme tokens airdropped without asking can be considered income if they have value and you have control over them.
Hard Forks: A hard fork that results in new coins (like the famous Bitcoin Cash fork from Bitcoin) is treated similarly. If your wallet supported the fork and you received new coins, it’s income at the moment you could use those coins. If you never accessed or claimed the forked coins (for example, they stayed unclaimed), you arguably might not have to report until you do have control, but that gets into tricky territory. Generally, if it’s sitting in your wallet, that counts as received.

In short, free crypto isn’t free from taxes. Make sure to include the value of any airdrops or forked coins you got in 2024 on your tax return.

NFTs (Minting, Buying, and Selling)

Non-Fungible Tokens (NFTs) have their own twist, but tax-wise, the IRS currently lumps them under digital assets (property) as well. Here’s how various NFT activities are taxed:

Buying an NFT: If you buy an NFT with fiat (say you paid $500 via credit card on an NFT marketplace), that purchase itself isn’t a taxable event (same as buying crypto with cash). If you buy an NFT with cryptocurrency, however, it’s two things happening: you are disposing of your crypto (taxable) and acquiring the NFT. For example, purchasing an NFT for 0.1 ETH – you trigger a capital gain/loss on that 0.1 ETH as if you sold it for, say, $200 (its value at that time). The NFT’s initial basis to you will be $200.
Minting an NFT: Minting (creating) your own NFT art or collectible is not a taxable event by itself. You’re basically creating a piece of property (like painting a painting). There’s no income until you sell it. Do keep track of any costs associated (platform fees, gas fees) – those might be treated as expenses or added to basis. Also note, the crypto used to pay a minting fee (like gas on Ethereum to mint) is a disposal of that crypto (taxable on that small amount). This is a minor detail, but for completeness: if you spent 0.01 ETH on gas to mint, that 0.01 ETH triggers a capital event (likely a tiny one).
Selling an NFT (as a creator): If you created an NFT and then sold it (perhaps on a marketplace), the proceeds are taxable income to you. The IRS would view this similar to an artist selling a painting – it’s ordinary income (and potentially self-employment income if you’re doing this as a business). So if you sold your art NFT for $1,000, that’s $1,000 of income. If you repeatedly sell NFTs you create, you likely should be filing a Schedule C as a self-employed artist, which allows deducting related costs (marketplace fees, etc.). If it’s a one-off hobby sale, you still owe income tax on the profit from the sale (hobby income).
Selling an NFT (as a collector): If you bought an NFT and later sold it for more (or less), that’s a capital gain or loss transaction, just like selling cryptocurrency or any collectible. One wrinkle: The IRS hasn’t explicitly stated, but NFTs might be considered “collectibles” for tax purposes in some cases (like art). If so, long-term gains on collectibles have a top tax rate of 28% (instead of 20%). But absent clear guidance, many tax pros just treat NFT sales like regular property sales (0/15/20% long-term rates depending on income). In any case, report any gains or losses from NFT flips on Form 8949/Schedule D.
Royalties from NFTs: If you’re an NFT creator who gets royalty payments on secondary sales, those royalties are also taxable as income when you receive them.

As you can see, NFTs follow the same principles: buying with fiat or minting = not taxed immediately; selling or trading = taxed as income or capital gains depending on context.

Transferring Crypto Between Wallets

Moving crypto from one wallet or exchange to another (when you own both) is not a taxable event. You’re just shifting your own assets around. In fact, the IRS explicitly says you can check "No" on that crypto question if your activities were limited to transferring assets between wallets/accounts you control.

However, keep good records of transfers. A common tax mistake is when a transfer is mistaken for a sale. For example, you withdraw 0.5 BTC from Exchange X and later deposit 0.5 BTC into Exchange Y. To an exchange or tax software that doesn’t know better, that deposit might look like you acquired new crypto (which could be misinterpreted as income if not matched to the withdrawal). Good crypto tax tools (and careful record-keeping) will match transfers so they aren’t counted as buys/sells.

If you incur a transaction fee during a transfer (like network gas fees), note that the fee paid in crypto is technically a disposition of that crypto. That tiny amount will have a cost basis and might result in a small loss or gain. Most people just account for it as part of the cost of the transfer (which may be deductible as an expense if it’s related to business assets). But strictly speaking, yes, spending (for example) 0.001 BTC on a Bitcoin network fee is a taxable disposal of that 0.001 BTC. Don’t overthink this – just be aware if your reports show a bunch of small transactions, they could be fees.

Bottom line: moving your coins around is fine and not taxed. Just document where they went so you can show it’s the same coins. A tool like Moonscape can automatically track transfers and ensure they’re not treated as taxable events.

How and When to File Your Crypto Taxes (U.S.)

Mark your calendar: April 15, 2025 is the deadline to file your tax return for the 2024 tax year (unless you file for an extension). Crypto income and gains are reported as part of your normal income tax return – there’s no special separate crypto tax return. Here’s a rundown of the filing process and key forms for U.S. taxpayers with crypto:

Timeline: The 2024 tax year covers January 1, 2024 – December 31, 2024. You file by April 15, 2025. If you need more time, you can submit an extension (Form 4868) by April 15 to extend the filing deadline to October 15, 2025. Important: an extension to file is not an extension to pay taxes. If you think you owe, you should pay an estimate by April 15 to avoid interest. U.S. expats get an automatic extension to June 15, 2025 (with further extension to Oct 15 if needed).
Form 1040 and the Crypto Question: When filling out your Form 1040 (the main individual tax form), you’ll answer the digital assets question at the top. If you had any taxable crypto events (as we discussed), check “Yes.” If not, check “No”. Lying here is a bad idea – it’s under penalty of perjury. The rest of the 1040 will include income totals and the Schedule D if you have capital gains.
Form 8949 (Sales and Dispositions): This is where you list your individual crypto trades and sales if you sold or traded crypto. Each transaction should include the date acquired, date sold, amount, cost basis, proceeds, and gain or loss. If you have a ton of transactions, you can attach a consolidated statement from your crypto tax software or exchange instead of manually writing them in. The totals from Form 8949 then flow into Schedule D.
Schedule D (Capital Gains and Losses): This form summarizes your total capital gains and losses for the year. You’ll separate short-term vs long-term gains here and apply any loss carryovers. In the end, the net gain or loss carries to your 1040. For many crypto traders, Schedule D is where the main action is (supported by details on Form 8949).
Schedule 1 (Additional Income): If you had crypto income that wasn’t from selling capital assets – for example, staking income, mining income (as a hobby), airdrops, referrals or rewards – these typically go on Schedule 1 as “Other Income”. You can write a description like “cryptocurrency staking income” and the amount. All your other miscellaneous income sums up here and then goes into the 1040. (If you got a Form 1099-MISC from an exchange, it often maps to Schedule 1 income.)
Schedule C (Business Income): If you were self-employed in a crypto-related activity – e.g. you ran a mining rig as a business, you actively traded crypto for income (some might argue frequent trading could be business, though usually it’s investment), or you created and sold NFTs as a business – you might use Schedule C. On Schedule C, you report income and can deduct expenses related to that business (mining equipment, internet, art creation costs, etc.). Schedule C net profit is subject not just to income tax but also self-employment tax (for Social Security/Medicare). It’s more complex, so if you think you fall in this bucket, consider consulting a tax professional.
Form 1099s: By late January or early February 2025, you might receive various 1099 forms from exchanges or platforms:
- 1099-B: Brokers use this for reporting sales of assets. However, for 2024, most crypto exchanges are not yet required to issue 1099-B for your trades (new regulations will mandate detailed 1099-B or a new 1099-DA for crypto starting with 2025 transactions). A few platforms (like stock trading apps that offer crypto) might give you a 1099-B with proceeds, but many won’t for 2024.
- 1099-K: In the past, some U.S. exchanges issued Form 1099-K if your transaction volumes were high, but the IRS has changed thresholds (lowered to $600) and then delayed that change. It’s unlikely you’ll get a 1099-K from a crypto exchange for 2024 unless perhaps you used certain payment processors or NFT marketplaces. (Always check your tax reports on each platform to be sure.)
- 1099-MISC: This is common for exchanges to report miscellaneous income like referral bonuses, staking or interest if it’s $600 or more. If you earned significant staking rewards on an exchange, you might see a 1099-MISC. This form shows the amount of income – you should report at least that much in your return to match.
- W-2: If by chance you were salaried and your employer paid you in crypto, your employer should have withheld taxes and reported it on a W-2 (just like normal wages, with the crypto value converted to USD at payment time). In that case, it’s just part of your wages on your 1040.

Make sure any forms you get match your own records. If an exchange reported that they paid you $1,000 of income on a 1099-MISC, ensure you include that to avoid IRS notices. Even if you don’t get any forms, you must still report your crypto gains/income – the responsibility is on the taxpayer.

Other Relevant Forms: If you made any crypto gifts over the annual exclusion ($18k in 2024), you may need to file Form 709 (Gift Tax Return). Don’t worry, that’s not common for most. If you donated crypto to charity and the value was over $500, you’ll need Form 8283 for non-cash charitable contributions (and >$5k needs that appraisal we mentioned). These are edge cases but worth noting.

Lastly, when you file, you can use normal tax software (TurboTax, TaxAct, etc.) – most now have support for importing crypto transactions via file or integration. Or you can work with a CPA knowledgeable in crypto. You will attach your Form 8949 and any necessary statements to your return (electronically or paper). If you have an overwhelming number of trades, IRS allows attaching a consolidated CSV or PDF listing them rather than writing every line on the form.

Common Crypto Tax Mistakes to Avoid

Crypto taxes can be confusing, and people make mistakes. Here are some common pitfalls to watch out for (learn from others’ woes so you can avoid them!):

🚩 Not reporting crypto at all: Some think crypto is “untraceable” or that if no tax form was received, they can omit it. Big mistake. The IRS is cracking down on crypto and works with blockchain analytics companies to link transactions to taxpayers. Exchanges also report certain info to the IRS. Failing to report can lead to penalties or worse. Always report your crypto gains/income, even if you think the IRS won’t notice a small trade.
🚩 Thinking “crypto-to-crypto isn’t taxable until I go to USD”: We can’t emphasize enough – trading one crypto for another is taxable in the U.S. If you ignore those transactions, your tax return is wrong. This is a common misconception, so make sure you include all your swaps and trades, not just cash-out events.
🚩 Poor recordkeeping: Crypto can involve thousands of transactions across multiple exchanges and wallets. If you don’t keep good records, you might miss some or miscalculate. Many users have lost track of their cost basis, especially if coins moved around. Use portfolio trackers (like Moonscape) or at least spreadsheets to log every trade, transfer, and income event. This makes filing easier and helps you answer any IRS questions. Remember, you need records of how you calculated your gains.
🚩 Treating transfers as taxable: Don’t accidentally count a transfer as a sale. If you withdrew crypto from an exchange to a personal wallet and later sold it from that wallet, ensure your reports reflect that single continuous holding, not a withdrawal (sale) and a separate new “income”. This usually means reconciling the transfer in a tool or manually. Failing to do so might make it look like you have extra income.
🚩 Missing cost basis for old purchases: If you’ve been in crypto for years, you might have coins purchased a long time ago or acquired in ways you forgot. When you sell, if you don’t know the basis, you might default to 0 and overpay tax. Try to reconstruct your purchase history as best as possible. Many exchanges provide transaction history downloads. If you truly can’t find the original cost, the IRS allows reasonable methods (and there are default rules like FIFO – first in first out – if specific records aren’t kept).
🚩 Forgetting small income (airdrops, staking): It’s easy to overlook that 50 DOGE you got as a giveaway or the random token airdrop sitting in your wallet. If it had value, technically it’s income. Consider whether all those minor items cumulatively matter. If negligible, it might not raise flags, but to be safe, include all income, even small amounts. It shows good faith and completeness.
🚩 Not distinguishing short vs long term: The tax rate difference can be big. Make sure your transaction tracking knows which coins were held over a year. If you mix them up, you could calculate the wrong tax. Most software will handle this if dates are entered correctly.
🚩 Filing late or not at all: This one’s obvious – missing the deadline or ignoring the tax return can lead to failure-to-file penalties, and if you owe tax, failure-to-pay penalties and interest. If you’re feeling overwhelmed, file for an extension by April 15 to get more time. It’s far better to extend (or even file an incomplete return and amend later) than to just not file. The IRS has shown leniency for those who try to comply versus those who willfully ignore the rules.
🚩 Relying solely on exchange reports: While it’s great if your exchange gives you a tax report, be cautious. If you have multiple exchanges, their individual reports won’t include transfers between them and could misidentify some transactions. Also, if an exchange didn’t track your cost basis (some only track what happened on their platform), you need to combine data from all sources. Use a third-party tool to aggregate everything – don’t just plug in a 1099-B blindly if you know you have other activity elsewhere.
🚩 Not asking for help when needed: Crypto taxation is new for many accountants too, but there are professionals specializing in it. If you have a complex situation (like ICOs, staking nodes, DeFi protocol taxes, etc.), consider consulting a crypto tax CPA. It can save you money in the long run or prevent mistakes that trigger audits.

By being aware of these common mistakes, you can double-check your work and ensure an accurate tax filing. When in doubt, consult IRS guidance or a tax pro.

Tools and Tips for Tracking & Filing Crypto Taxes

Filing crypto taxes can feel like doing a puzzle – lots of pieces scattered across exchanges, wallets, and protocols. The good news is you don’t have to do it all manually. Here are some tools and tips to simplify the process:

Use a Crypto Tax Tracker/Calculator: The days of manually typing trades into a calculator are over (unless you really love spreadsheets). A crypto tax software tool like Moonscape can be a lifesaver. Moonscape iis a crypto portfolio tracker and tax calculator that consolidates all your transactions across exchanges and wallets, calculates your gains/losses, and generates reports for tax filing. Simply connect your exchange accounts or import your wallet addresses, and Moonscape will pull in your trades, transfers, and earnings. It can apply the right cost-basis method and even handle tricky transactions, giving you fully calculated tax obligations in one place. This not only saves you time but also reduces errors.
Other Crypto Tax Software: While we’re biased toward Moonscape (😇), there are other reputable tools out there (Koinly, CoinTracker, CoinLedger, e.g.). The key is to use something to aggregate your data. Most tools will let you review and reconcile transactions (label transfers, tag income, etc.) and then output a Form 8949 or even integrate with TurboTax. Find one that suits your needs – many have free tiers for a limited number of transactions, which is great if you’re a casual trader. Moonscape’s advantage is its seamless tracking and beginner-friendly interface – ideal if this is your first time tackling crypto taxes.
Keep Detailed Records Year-Round: It’s much easier to track your crypto activity as you go rather than scrambling next April. Consider logging significant transactions in a notebook or spreadsheet as they happen (or regularly downloading monthly statements from exchanges). At minimum, save your exchange transaction history files each year in case the exchange goes under or you lose access. The IRS requires you to maintain records that support your tax positions. That means documentation of every purchase, sale, exchange, or earning event. Digital records or spreadsheets are fine – just make sure they’re backed up.
Use Portfolio Trackers: Even if you’re not thinking about taxes yet, using a portfolio tracker app (like Moonscape’s app or others) throughout the year can give you insight into your unrealized gains/losses and potential tax impact if you sell. Some apps even have a “tax estimate” feature so you’re not blindsided at year-end. This can help you plan, like doing tax-loss harvesting (selling some losing positions to offset gains) before December 31.
Set Aside Crypto or Cash for Taxes: If you had substantial gains or income in crypto, remember that a portion of that belongs to the IRS. It’s wise to periodically convert some gains to cash and set it aside for taxes, or at least be mentally prepared. Nothing is worse than a surprise tax bill and no liquid funds to pay it. The IRS does accept crypto? Nope – you generally have to pay in USD, so plan liquidity accordingly.
Stay Updated on Tax Rules: Crypto tax regulations are evolving. For instance, the IRS is implementing new reporting rules that will require exchanges to issue Form 1099-DA with detailed gains info starting for 2025 transactions. While that doesn’t affect 2024 filings directly, it means the IRS will get more data in the future. Being aware of such changes can inform how you track things now. Following reputable crypto tax blogs (or the Moonscape blog!) or IRS announcements can keep you in the loop.
Double-Check Before Filing: Before you hit “submit” on your tax return, do a sanity check: Does the income on your 1040 roughly match what you think you earned? Do the totals on Schedule D make sense given your trading year? Compare this year’s crypto profit/loss to last year’s if you have carryovers. Little discrepancies (like a forgotten $100 airdrop) won’t usually cause drama, but big omissions (like a $10k sale you forgot) could. A final review or having a second pair of eyes (friend or accountant) review your crypto calculations is invaluable.

Remember, the goal of tools and good practices is to minimize stress and errors. Crypto taxes might never be fun, but with the right app (hint: Moonscape) and habits, they can be relatively painless.

Crypto Tax Filing Checklist (2024 Tax Year)

To wrap things up, here’s a handy checklist you can follow to prepare and file your crypto taxes for 2024. Use this as a step-by-step guide:

Compile a Transaction List: Gather all your crypto activity for 2024 – exchange trades, OTC trades, wallet transactions, airdrops received, staking payouts, mining income, NFT sales, etc. Check all exchanges and wallets you used. Don’t forget DeFi platforms or that old wallet you dusted off. (Tip: Use Moonscape or a similar tool to import data from all sources automatically.)
Reconcile and Classify Transactions: Go through the transactions and label them as needed:
- Which are buys (with fiat) – note cost basis.
- Which are sales/trades – you’ll need cost basis and proceeds.
- Which are transfers – mark those so they’re not counted as sales.
- Which are incomes (staking, mining, airdrop, interest) – note the USD value at receipt for each.
- Identify any non-taxable events clearly so you don’t accidentally include them.
Calculate Gains and Income: Using your records or tax software, calculate your capital gains or losses for each sale/trade. Sum up your total capital gains for the year (and separate short-term vs long-term). Also sum up all your crypto income (the USD value of all staking rewards, airdrops, etc. you got). If you had any crypto losses, note the total loss (you can use it to offset gains or deduct up to $3k against other income).
Gather Tax Documents: By early 2025, look for any tax forms from exchanges:
- Download your annual transaction reports from each exchange (even if they didn’t send you a 1099, they often have a tax report available).
- If you receive Form 1099-MISC, 1099-B, or 1099-K in the mail or email, save them. Make sure the info aligns with your own calculations. For instance, if Coinbase says you earned $800 staking (1099-MISC), ensure your records show roughly the same.
- If you have a W-2 or 1099-NEC for crypto payments from a job or contract, have those ready too.
Fill Out Tax Forms (8949, Schedule D, etc.): Start filling your tax return or inputting into tax software:
- Input capital transactions on Form 8949 (or import the file from your tax software). You can aggregate small trades if allowed, but ensure the totals match. Then carry the totals to Schedule D.
- Input crypto income on the appropriate line. For example, combine all your miscellaneous crypto income and put it on Schedule 1 (with description). If you have business income from crypto (like self-employed NFT artist or miner), fill out Schedule C with income and expenses.
- Answer “Yes” to the digital asset question on 1040 (since you had taxable events).
- Double-check the 1040 sums up everything correctly.
Review and Cross-Verify: Go through Common Mistakes (previous section) and ensure you haven’t:
- Missed any transaction (compare beginning vs end of year holdings to see if everything is accounted for).
- Misclassified something non-taxable as taxable or vice versa.
- Overstated or understated values (check a few big trades manually against current prices at the time for reasonableness).
- Ensure your reported gains + income roughly explain the change in your portfolio value year-over-year (this is a rough check but can catch glaring omissions).
File Your Tax Return (By April 15, 2025): Submit electronically (e-file) or via mail your completed return, including the forms that detail your crypto dealings. E-filing is generally recommended (tax software can e-file, and you can attach a PDF of your crypto transactions if needed). Keep a copy of everything filed (PDF printout of return and any attachments).
Pay Any Tax Due: If your calculations say you owe the IRS money, arrange payment by April 15. You can pay electronically on the IRS website. If you can’t pay in full, pay as much as you can and the IRS can work out a payment plan for the rest – but at least file the return on time.
(Optional) File an Extension if Needed: If you aren’t ready by April 15, file Form 4868 for an automatic extension until October 15, 2025. Remember to pay an estimated amount if you think you owe to minimize interest. Use the extra time to finish up correctly rather than rushing and making errors.
Plan for Next Year: After filing, take a breather – you did it! Now, take lessons learned to make next year smoother. Maybe adjust your strategy if you had a huge unexpected tax bill (e.g., setting aside 30% of each big profit for taxes going forward). And continue tracking your 2025 crypto activity with good habits from day one.

By following this checklist, you’ll ensure no stone is unturned in your crypto tax reporting. It might seem like a lot, but with practice (and tools like Moonscape to automate much of it), it becomes a routine part of being a crypto investor in the U.S.

Final Thoughts

Filing crypto taxes may never be as thrilling as riding a bull market rally, but it doesn’t have to be a nightmare either. With the right knowledge and tools, you can confidently navigate the process and stay on the IRS’s good side. Remember that the tax rules aren’t there to punish you for dabbling in crypto – they’re just rules that ensure everyone pays their fair share on gains and income. By understanding how different crypto activities are taxed and staying organized, you’ll avoid headaches and potential penalties.

So as you file your 2024 taxes, pat yourself on the back for surviving another year in crypto and handling the not-so-fun part like a responsible adult. Once the forms are submitted and the taxes paid, you can get back to focusing on what really matters – whether that’s analyzing the next altcoin, staking more ETH, or simply HODLing for dear life. 😎Happy filing, and to the moon (just don’t forget to report it when you cash out)!