Crypto gains and losses are taxable—here’s how to report them properly.
Transcript:
ANDY PHILLIPS: A common question we see from people is, are my crypto gains and losses really reportable? Are those gains really taxable? So there’s a couple of things to focus on. And the answer is Yes. It is not magical. Nontaxable income crypto gains from sales and other transactions like that are taxable. Here’s the second piece is starting for 2025. If you have a sale on most crypto exchanges, they’re going to issue you what’s called a new form, what’s called a form 1099 da, which stands for Digital asset. Not only are you going to get that form to help you report your transactions, the IRS and possibly your state is going to get a copy as well. And so but Yeah, to the top, even if you don’t get a 1099 all of those transactions are taxable. So you want to make sure you have your records. So you’re only paying tax on the actual amount of gain and not the gross sales price.
So crypto gains and losses are treated as property. And what that means is generally when you have a sale, you’re going to report it as a capital gain or loss, with the difference for the gain being the gain or loss being what you paid for that asset. You’re going to subtract that from the gross sales proceeds to determine your gain. So Yeah, those are generally going to be taxed as capital gains somewhat similar to stock. But there are some important differences.
For crypto investors, the key things you need to be aware of is one for 2021, 24 and prior years. Those gains are taxable. Even if you didn’t get a 1099 from your platform. You also want to know, hey, you may have traded across several platforms. You may want to use a tool to help aggregate your gains and losses, because sometimes heavy investors move their crypto around at times between those wallets and some of those transactions. If you’re simply picking up a cryptocurrency and moving it from one platform or wallet to another, that’s not taxable. Now, if you’re selling it or you’re using crypto to actually buy something, those surprisingly on that second one, those are taxable transactions. So understanding what records do I need and what transactions are really taxable are incredibly important. If you’re a crypto investor.
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