How to File Crypto Taxes in United States (2026 Guide)
The IRS treats cryptocurrency as property, which means every sale, trade, or disposal can trigger a taxable event. With new Form 1099-DA requirements from exchanges and Rev. Proc. 2024-28 mandating per-wallet cost basis tracking, 2026 brings more scrutiny than ever. Here is your comprehensive guide to filing crypto taxes correctly and avoiding IRS issues.
Quick Facts: US Crypto Taxes
| Tax Authority | IRS (Internal Revenue Service) |
| Filing Deadline | April 15 |
| Extended Deadline | October 15 |
| Short-Term Rate | Up to 37% (ordinary income) |
| Long-Term Rate | 0%, 15%, or 20% |
| Currency | USD (US Dollar) |
Understanding US Crypto Tax Rules
The IRS has classified cryptocurrency as property since 2014, and the rules have become increasingly detailed over the years.
Property Classification: Every cryptocurrency is treated as property, meaning capital gains tax rules apply when you dispose of crypto. This is the same treatment as stocks, bonds, and real estate.
Short-Term vs Long-Term Gains:
- Short-term (held 1 year or less): Taxed as ordinary income at your marginal rate (10%, 12%, 22%, 24%, 32%, 35%, or 37%)
- Long-term (held more than 1 year): Taxed at preferential rates of 0%, 15%, or 20% based on income
Long-Term Capital Gains Rates (2025):
| Filing Status | 0% Rate | 15% Rate | 20% Rate |
|---|---|---|---|
| Single | Up to $48,350 | $48,351 - $533,400 | Over $533,400 |
| Married Filing Jointly | Up to $96,700 | $96,701 - $600,050 | Over $600,050 |
Taxable Events:
- Selling crypto for USD or any fiat currency
- Trading one cryptocurrency for another
- Using crypto to pay for goods or services
- Receiving mining rewards (income + capital gains when sold)
- Earning staking rewards (income when received)
- Receiving airdrops (income at fair market value)
- Getting paid in crypto (income at fair market value)
Non-Taxable Events:
- Buying crypto with USD
- Transferring between your own wallets
- Gifting crypto (but the recipient inherits your cost basis)
2026 Key Changes: 1099-DA and Per-Wallet Tracking
Form 1099-DA
Starting in 2025, cryptocurrency exchanges must issue Form 1099-DA to users. This form reports:
- Gross proceeds from crypto sales
- Cost basis (where available)
- Gain/loss information
You will receive these from Coinbase, Kraken, Gemini, Binance.US, and other regulated exchanges. You must reconcile these with your own records.
Rev. Proc. 2024-28: Per-Wallet Cost Basis
This revenue procedure requires tracking cost basis on a per-wallet or per-account basis. Key implications:
- You cannot universally apply FIFO across all wallets
- Each wallet or exchange account is treated separately
- Transferring between wallets does not reset cost basis but tracking becomes complex
- Specific identification must occur at the account level
This makes accurate record-keeping more important than ever.
Step-by-Step Filing Process
Step 1: Gather All Transaction Records
Collect every piece of crypto transaction data for the calendar year:
- Exchange records: Coinbase, Kraken, Gemini, Binance.US, etc.
- DeFi transactions: Swaps, liquidity provision, yield farming
- Wallet transactions: MetaMask, Ledger, Trust Wallet
- NFT sales and purchases
- Staking and mining rewards
- Airdrops received
- 1099 forms: 1099-DA, 1099-MISC, 1099-B
Export CSVs and download all 1099s by the end of January.
Step 2: Calculate Cost Basis Using Proper Methods
For each disposal, determine your cost basis:
- Specific Identification: Identify exactly which coins you are selling (preferred for tax optimization)
- FIFO (First In, First Out): Oldest coins sold first
- LIFO (Last In, First Out): Newest coins sold first
- HIFO (Highest In, First Out): Highest cost basis sold first (minimizes gains)
Remember: Under Rev. Proc. 2024-28, you must apply your chosen method per-wallet.
Step 3: Calculate Your Gains and Losses
For each disposal:
- Gain/Loss = Proceeds - Cost Basis - Fees
- Categorize as short-term or long-term based on holding period
- Sum all short-term and long-term gains/losses separately
Step 4: Calculate Income from Mining, Staking, and Airdrops
These are taxed as ordinary income when received:
- Mining: Fair market value when coins are mined
- Staking: Fair market value when rewards are received
- Airdrops: Fair market value when received (if you have dominion and control)
This income is reported separately from capital gains and establishes your cost basis for future sales.
Step 5: Complete Required Forms
Your crypto tax forms:
Form 8949 (Sales and Dispositions of Capital Assets):
- Part I: Short-term transactions
- Part II: Long-term transactions
- List each transaction or summarize by category
- Include cost basis, proceeds, and gain/loss
Schedule D (Capital Gains and Losses):
- Summary of Form 8949
- Net short-term and long-term gains/losses
- Carryforward of prior year losses
Schedule 1 (Form 1040):
- Mining and staking income (if not self-employment)
- Other crypto income
Schedule C (if applicable):
- Mining as a business
- Crypto trading as a business
Step 6: Answer the Crypto Question on Form 1040
Form 1040 includes a question about cryptocurrency: “At any time during [year], did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?”
Answer YES if you had any crypto activity beyond simply holding. Answer NO only if you did not buy, sell, trade, receive, or dispose of any crypto during the year.
Step 7: File and Pay
- Regular deadline: April 15
- Extension to file: October 15 (but you must still pay by April 15)
- Electronic filing is recommended for accuracy
Tax-Loss Harvesting Strategies
The US allows tax-loss harvesting, which can significantly reduce your tax bill:
What is Tax-Loss Harvesting? Selling crypto at a loss to offset gains. The losses reduce your taxable gains, lowering your tax bill.
Key Rules:
- Net short-term losses first offset short-term gains
- Net long-term losses first offset long-term gains
- Any remaining losses offset the other category
- Up to $3,000 in net losses can offset ordinary income per year
- Remaining losses carry forward indefinitely
The Wash Sale Rule: As of 2026, be aware of potential wash sale rule application to crypto. While not explicitly applied historically, legislation has been proposed. If applied, you cannot claim a loss if you buy the same crypto within 30 days before or after the sale.
Common Mistakes to Avoid
Ignoring Crypto-to-Crypto Trades: Every swap is a taxable event. Trading BTC for ETH triggers capital gains tax on the BTC.
Not Reconciling 1099-DA: If your numbers differ from exchange-reported figures, the IRS will notice. Reconcile and document discrepancies.
Forgetting Per-Wallet Tracking: Rev. Proc. 2024-28 requires per-wallet cost basis tracking. Using universal FIFO across all accounts is no longer compliant.
Missing DeFi Activity: On-chain swaps, liquidity provision, and yield farming are all taxable. Do not assume that if you did not use a centralized exchange, it does not count.
Incorrect Holding Period Calculation: Long-term is more than 365 days, not exactly 365 days. Double-check dates for borderline transactions.
Making It Easier with the Right Tools
US crypto taxes are arguably the most complex in the world, with Form 8949 requirements, per-wallet tracking under Rev. Proc. 2024-28, 1099-DA reconciliation, and the need to categorize short-term vs. long-term gains across potentially thousands of transactions.
Awaken Tax is built for full IRS compliance. It automatically imports from all major US exchanges (Coinbase, Kraken, Gemini, Binance.US), syncs with on-chain wallets, and supports 10,000+ DeFi protocols. The platform applies per-wallet cost basis tracking as required, generates complete Form 8949 and Schedule D, reconciles with 1099-DA, and identifies tax-loss harvesting opportunities. It handles even the most complex portfolios with institutional-grade accuracy.
Get started free with up to 100 transactions at Awaken Tax.
Key Deadlines to Remember
| Deadline | Description |
|---|---|
| April 15 | Individual tax filing deadline |
| April 15 | Q1 estimated tax payment |
| March 15 | S-Corp and Partnership filing deadline |
| April 15 | C-Corp filing deadline |
| October 15 | Extended individual filing deadline |
| September 15 | Extended corporate filing deadline |
Missing deadlines triggers penalties and interest, so mark your calendar.
Final Thoughts
US crypto taxes are complex, but the IRS provides clear (if detailed) guidance. The key to success is accurate record-keeping, understanding the distinction between short-term and long-term gains, properly categorizing income from mining and staking, and using the right cost basis method for each wallet. With 1099-DA reporting from exchanges and increased IRS scrutiny, accurate filing is more important than ever. Start gathering your records in January, use specialized crypto tax software, and you will be well-prepared for the April 15 deadline.