When you buy, sell, trade, or earn cryptocurrency, a digital asset treated as property by the U.S. government. Also known as digital currency, it triggers taxable events just like stocks or real estate. The IRS, the U.S. tax authority that enforces federal income tax laws. Also known as Internal Revenue Service, it has been actively tracking crypto transactions since 2014. If you moved crypto in 2023 or 2024, you likely owe taxes—even if you didn’t cash out. Many people think holding crypto means avoiding taxes. That’s wrong. The IRS doesn’t care if you hold Bitcoin for five years. They care if you traded it for USD, bought a coffee with it, or earned rewards from staking.
There are three big things the IRS watches: Form 1099, a tax document exchanges issue when you sell or earn crypto. Also known as 1099-B or 1099-MISC, it’s sent to both you and the IRS. If you used Binance, Coinbase, or Kraken, you probably got one. But not all activity shows up here—like peer-to-peer trades or DeFi swaps. That’s where crypto tax reporting, the process of calculating gains, losses, and income from blockchain activity. Also known as crypto accounting, it’s your legal responsibility even if no form arrives. You must track every trade, every airdrop, every staking reward. Even a $20 swap from ETH to SOL creates a taxable event. The IRS doesn’t care if you lost money overall. They want to know what you sold, when, and for how much.
Some people think they can hide crypto from the IRS. They can’t. Exchanges now share data with the IRS under new reporting rules. Wallets don’t report, but if you cash out through a regulated platform, your history is already in their system. The IRS has matched wallets to identities before. They’ve sent letters. They’ve audited. And they’re getting better at it. If you didn’t report last year, it’s not too late to fix it. The IRS crypto tax rules are clear: you owe taxes on gains, not just cashouts. The penalty for ignoring this? Interest, fines, and sometimes criminal charges.
Below, you’ll find real breakdowns of how crypto taxes work in practice. We cover how to spot fake airdrops that look like income, what happens when you trade on unregulated platforms, and why some exchanges report while others don’t. You’ll see how people in the UK and EU handle crypto taxes differently—and why U.S. rules are stricter. No fluff. Just what you need to stay compliant and avoid surprises.
Crypto mining rewards are taxed as income when received and again as capital gains when sold. In 2025, IRS rules require detailed tracking, quarterly payments, and new reporting forms. Know your obligations to avoid penalties.
