How to Calculate & Report Crypto Taxes 2025-2026: A Complete Guide

2025-11-25

Navigating the world of crypto taxes in 2025-2026 can be tricky, but all crypto investors need to stay compliant with tax regulations. With crypto becoming more mainstream, tax authorities worldwide are tightening their grip on how digital assets are reported and taxed.

If you’re unsure how to calculate and report your crypto taxes, don't worry! This guide will walk you through everything you need to know to file your crypto taxes properly, including key forms and steps.

What is Crypto Tax?

Crypto tax refers to the taxation applied to cryptocurrencies like Bitcoin, Ethereum, and other altcoins. While many people think of crypto as a currency, tax authorities typically treat it as property.

This means that any sale, trade, or income earned from crypto can be taxable. Crypto transactions that result in profits are taxed as capital gains, while crypto earned from activities like staking, mining, or airdrops is considered ordinary income and taxed accordingly.

Key Crypto Tax Forms You Need

There are several essential forms used to report crypto-related taxes in the U.S. These forms help ensure that you accurately calculate capital gains, losses, and income earned from crypto investments:

Form 8949: Used to report each taxable transaction, including sales, trades, and disposals of crypto assets. You need to list every transaction, including the date acquired, date sold, proceeds, and cost basis.
Schedule D: This form summarizes the totals from Form 8949, including short-term and long-term capital gains or losses. You need to transfer the totals from Form 8949 to this form to calculate your overall gains or losses.
Schedule C: This form is used if you earned crypto income as part of self-employment, such as from mining or staking.
Form 1040: The main form for reporting all income, including crypto income.

How to Calculate and Report Crypto Taxes in 2025-2026

Now that you understand the necessary forms, here’s a step-by-step guide on how to calculate and report your crypto taxes:

Step 1: Calculate Capital Gains and Losses on Crypto

Start by calculating your capital gains and losses for each crypto transaction. The basic formula is:

Capital Gain or Loss = Proceeds from Sale - Cost Basis

Proceeds from Sale: This is the amount you received when you sold or traded the crypto. For example, if you sold Bitcoin for USD, the amount you received in USD is your proceeds.
Cost Basis: This is the original price you paid for the crypto, including any fees. For instance, if you purchased Bitcoin for $10,000 and paid a transaction fee of $50, your cost basis would be $10,050.

Once you’ve calculated the gains or losses for each transaction, you can move on to the next step.

Step 2: Complete IRS Form 8949 for Crypto

Step 2 Complete IRS Form 8949 for crypto

Form 8949 is where you report each crypto transaction. You’ll need to categorize each transaction as either short-term (held for less than a year) or long-term (held for more than a year). Each category will be taxed differently:

Short-Term Capital Gains: These are taxed at your regular income tax rate, which can be as high as 37% for high earners.
Long-Term Capital Gains: These are taxed at lower rates, typically 0%, 15%, or 20%, depending on your income level.

You will report each transaction in the appropriate section of Form 8949, listing the following:

Description of Property: For example, "1 Bitcoin (BTC)."
Date Acquired: The date you purchased the crypto.
Date Sold: The date you sold or traded the crypto.
Proceeds (Sales Price): The amount you received when selling or trading the crypto.
Cost Basis: The amount you paid for the crypto, including fees.
Adjustments: Any adjustments to the gain or loss based on things like transaction fees.
Gain or Loss: The difference between proceeds and cost basis.

Step 3: Include Totals from Form 8949 on Schedule D

Step 3 Include totals from Form 8949 on Schedule D

Once you’ve completed Form 8949, you’ll need to transfer the totals from each section (short-term and long-term gains/losses) to Schedule D. This form summarizes your overall capital gains or losses.

Schedule D will calculate:

Short-Term Capital Gains/Losses: From transactions held for less than a year.
Long-Term Capital Gains/Losses: From transactions held for over a year.

These totals will be used to determine your final tax liability for your crypto transactions.

Step 4: Include Any Crypto Income on Schedule C or Form 1040

Step 4 Include any crypto income

If you earned crypto income, such as staking rewards, mining profits, or airdrops, it needs to be reported as ordinary income. This income should be reported on:

Schedule C: If you earned crypto income through self-employment activities, such as mining.
Form 1040: If you earned crypto income but weren’t self-employed (e.g., staking rewards, airdrops).

For instance, if you earned 1 ETH through staking, and the value of ETH at the time was $1,500, you would report $1,500 as income.

Step 5: Finalize Your Tax Return

After completing Form 8949, Schedule D, and Schedule C (if applicable), transfer the totals to Form 1040. Ensure that all income, deductions, and credits are accurately reported. Double-check that your crypto transactions are reconciled with your records to avoid mistakes.

Tax Implications of Crypto Activity in 2025-2026

Capital Gains: Crypto transactions are taxed based on how long you hold the asset. If you hold crypto for over a year, it qualifies for long-term capital gains tax rates, which are generally more favorable. Short-term capital gains, on the other hand, are taxed at your regular income tax rate.
Crypto Income: Crypto income from activities like mining, staking, and airdrops is taxed as ordinary income, meaning it will be subject to the same tax rates as wages or salary.
Crypto Losses: You can use crypto losses to offset gains, which may help lower your overall tax liability. This is known as tax-loss harvesting.

Conclusion

Understanding how to calculate and report crypto taxes is essential for staying compliant and avoiding costly penalties. Whether you're a casual investor or an active trader, knowing which forms to use and how to report your transactions can save you time and money in the long run.

As the crypto tax landscape evolves, make sure to stay informed about any changes in tax laws and consult a tax professional if needed.

Want to stay ahead of crypto tax rules? Explore Bitrue Exchange for seamless trading or read more insights on crypto taxation on the Bitrue Blog.

FAQ

What is crypto tax?

Crypto tax is the tax applied to gains, losses, and income from cryptocurrency transactions, including sales, trades, and activities like staking and mining.

How do I calculate crypto capital gains?

To calculate crypto capital gains, subtract the cost basis (what you paid for the asset, including fees) from the proceeds (what you received from the sale).

What forms do I need to report crypto taxes?

You’ll need Form 8949 for reporting each crypto transaction, Schedule D for summarizing your capital gains or losses, and Schedule C if you earned income from crypto as part of self-employment.

Is crypto income taxable?

Yes, crypto income such as staking rewards, mining, and airdrops is taxed as ordinary income and must be reported on your tax return.

Do I need to report small crypto transactions?

Yes, even small crypto transactions under $600 need to be reported to the IRS. All taxable crypto activity must be disclosed on your tax return.

Crypto-Tax

Disclaimer: The content of this article does not constitute financial or investment advice.

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