Short answer
US crypto tax compliance is complex but tractable. The IRS treats crypto as property (Notice 2014-21). Every sale, swap, NFT trade, payment, and most receipts are taxable events. Form 8949 reports each transaction; Schedule D summarizes; Form 1040 has a yes/no checkbox about crypto activity. Use a tax-tracking tool (Koinly, CoinTracker, TokenTax) — manual tracking is impractical for anyone who's done more than a dozen transactions. US exchanges now report customer transactions to the IRS (see the broker reporting rule below), and penalties for non-reporting can be substantial.
What's taxable
Selling for USD. Capital gain or loss based on cost basis vs sale price.
Trading crypto for crypto. Each swap is a taxable event. Trading BTC for ETH is two transactions: sell BTC (gain/loss), buy ETH (new cost basis).
Receiving airdrops. Ordinary income at fair market value on receipt. The received tokens become your new cost basis.
Staking rewards. Ordinary income when received. Rev. Rul. 2023-14 clarifies the receipt-at-control rule.
Mining income. Ordinary income at fair market value when mined.
NFT sales. Capital gain or loss like any other property.
Paying for goods with crypto. Sale at fair market value, capital gain/loss event.
What's not taxable
Buying crypto with USD. Establishes cost basis; no immediate tax.
Transferring crypto between your own wallets. Not a sale; no tax event. But keep records to prove the transfer was between your own addresses.
Gifting crypto. Gift tax may apply for amounts above the annual gift exclusion per recipient (the IRS adjusts it each year, so use the current figure on IRS.gov), but no income tax event.
The reporting forms
Form 8949. List each capital-gain transaction. For 50+ transactions, this becomes impractical without software.
Schedule D. Summarizes Form 8949 totals.
Schedule 1. Reports ordinary income (airdrops, staking).
Form 1040. The digital asset question near the top of the form must be answered yes or no. The IRS words it as: did you, at any time during the tax year, receive a digital asset (as a reward, award or payment for property or services), or sell, exchange, or otherwise dispose of a digital asset (or a financial interest in one)? Answer truthfully — the return is signed under penalties of perjury.
Schedule B / FBAR / Form 8938. For crypto held on foreign exchanges, may require additional reporting if balances exceed thresholds.
The 2025 broker reporting rule
IRS Form 1099-DA, mandated by the 2021 Infrastructure Act, requires US crypto exchanges to report customer transactions starting 2025 tax year. This means the IRS sees your trading activity on these exchanges — they know what you traded, even if you don't report.
For 2026 tax filing (for 2025 activity), exchanges have already submitted 1099-DA forms. Your tax software (Koinly, etc.) imports these directly.
The professional help threshold
If you had more than 100 transactions in the tax year, complex DeFi positions, NFT activity, or any cross-border concern: hire a licensed tax professional (a CPA or enrolled agent) who already handles crypto returns. The fee depends on how messy your year was, but the penalties for getting this wrong usually cost more.