Yes, you are required to report cryptocurrency transactions on your tax return if they result in a taxable event.
This includes selling crypto for cash, exchanging one crypto for another, using crypto to purchase goods or services, or receiving crypto as payment or through mining/staking. The IRS treats cryptocurrency as property, so each transaction must be evaluated for capital gain or loss.
If you held the asset for over a year before selling, you may qualify for long-term capital gains tax rates, which are typically lower than short-term rates. If you held it for one year or less, gains are taxed as ordinary income. It’s essential to keep detailed records of all your crypto transactions, including the date of acquisition, cost basis, and sale price.
Failing to report crypto gains can result in penalties or interest, especially since the IRS has stepped up enforcement in recent years. Make sure to check the appropriate boxes on your tax forms and report income accurately.
Read also: The Ultimate Crypto Tax Guide
