As the April 15, 2025, tax filing deadline approaches, US crypto investors must prepare to report all digital asset transactions from 2024. From buying and selling Bitcoin to earning tokens via staking or airdrops, crypto activity can trigger taxable events that require accurate IRS reporting.

IRS Rules: When Crypto Becomes a Taxable Event

The IRS treats cryptocurrency as property, not currency. This means any profit from selling, trading, or spending crypto is taxed as either capital gains or ordinary income. For instance:

• Short-term capital gains apply if the asset was held for one year or less and are taxed at standard income rates (10%–37%).
• Long-term capital gains apply to holdings over a year and benefit from lower rates (0%, 15%, or 20%).

Meanwhile, crypto income—from staking, mining, or airdrops—is taxed based on the fair market value (FMV) when received.

Also read: How to Use Cryptocurrency for Peer-to-Peer (P2P) Car Rentals in 2025

Essential Forms for Filing Crypto Taxes in 2025

Here are the key IRS forms crypto users need for the 2024 tax year:

• Form 8949: Report capital gains and losses from crypto disposals.
• Schedule D (Form 1040): Summarizes totals from Form 8949.
• Schedule 1 or C (Form 1040): Report crypto income from rewards or business activity.
• Form 1099-MISC: May be received if income exceeds $600.
• FBAR (FinCEN Form 114): Required if you held over $10,000 in foreign crypto accounts.

Starting in 2025, Form 1099-DA will be introduced for more detailed crypto transaction reporting, but it doesn’t apply to 2024 filings.

Step-by-Step: Filing Your Crypto Taxes Correctly

1. Gather transaction records: Export CSVs from exchanges and wallets. Include timestamps, cost basis, and FMV.
2. Identify taxable events: Selling, trading, spending, or earning crypto are taxable. Transfers between your wallets are not.
3. Calculate gains and income: Use FMV minus cost basis for each event.
4. Apply deductions: Use the standard deduction—$14,600 (single), $29,200 (married)—to reduce taxable income.
5. Fill IRS forms: Complete Form 8949, Schedule D, Schedule 1 or C, and Form 1040. File by April 15, 2025.

IRS Penalties and 2025 Changes

Failing to file or under-reporting may trigger penalties up to 25%, audits, or even criminal charges. The IRS is tightening crypto enforcement, especially with new cost basis rules and Form 1099-DA coming into effect in 2025.