How to Report Crypto on Your Taxes

Step 1 — Pull a complete transaction history

Export the full CSV or API history from every exchange, wallet, bridge, and DeFi protocol you touched during the year, not just the ones that sent you a tax form. Gaps are what create wrong numbers later.

• Centralized exchange CSVs plus any Form 1099-DA, 1099-B, or 1099-MISC
• Self-custody wallet addresses for every chain you used
• Records of transfers between your own wallets (these are not taxable, but they look like sales without documentation)
• Staking, mining, airdrop, referral, and interest reward statements

Step 2 — Separate disposals from income

Disposals — selling for dollars, trading coin for coin, spending crypto, paying a fee in crypto — produce capital gains and losses. Income events — staking rewards, mining, airdrops, interest, and crypto paid for work — are ordinary income at receipt, and that receipt value becomes your cost basis for the later disposal.

Step 3 — Establish cost basis per wallet or account

Basis is tracked per account or wallet, and the method you use must be applied consistently and documented before you dispose. When exchange data shows a zero or missing basis, reconstruct it from purchase records, bank statements, and block explorer history rather than accepting a $0 basis that inflates your gain.

Step 4 — Fill out the forms

• Form 8949 — every disposal, split between short-term and long-term
• Schedule D — totals, loss limits, and carryforwards
• Schedule 1 (other income) or Schedule C (business/self-employment) — crypto income
• Form 1040 digital asset question — answered yes or no
• Schedule B / Form 8938 / FBAR — where foreign platforms or interest are involved

Step 5 — Reconcile before you file

Compare the totals on your software report against each 1099 you received. Mismatched proceeds are the number one cause of automated IRS notices — a matching return with an attached explanation beats a clean-looking return that disagrees with third-party data.