Crypto Compass

The IRS treats cryptocurrency as property, not currency, for federal tax purposes. That one rule creates most of the reporting obligations US investors face.

• Not taxable: Buying crypto with dollars and holding it is generally not a taxable event.
• Taxable disposals: Selling for dollars, swapping one coin for another, and spending crypto on goods or services are all taxable — even crypto-to-crypto swaps with no dollars involved.
• Income: Pay received in crypto, mining rewards, and in many cases staking rewards are generally taxable as income when you receive and control them.
• Gains and losses: Held one year or less, gains are short-term at ordinary income rates; held more than one year, they may qualify for lower long-term rates. Losses can offset gains, and up to 3,000 dollars a year of net losses can offset ordinary income.
• Moving your own crypto: Transferring between wallets you own is generally not taxable by itself, but keep records to prove it was not a sale.
• Forms are not the full story: 1099-DA forms do not cover decentralized exchange trades, wallet transfers, or off-exchange activity. Answer the Form 1040 digital asset question honestly.
• Records to keep: Date, coin and amount, dollar value at the time, platform or wallet, fees, and purpose — for at least three years after filing.

Disclaimer: This article is for educational purposes only and is not tax, legal, or financial advice. Tax laws change frequently. Consult a qualified tax professional before filing.