US crypto taxes for beginners: how to file a 2025 return

For federal tax purposes, digital assets are treated as property. Selling, exchanging or spending a capital asset can create a capital gain or loss; receiving crypto for services or as a reward can create ordinary income. The 2025 filing season also introduces Form 1099-DA broker-proceeds reporting, but most 2025 statements do not include basis. This guide shows what a first-time filer must reconstruct, which forms can apply and where software output still needs review.

Start with the IRS property rule

IRS Notice 2014-21 treats convertible virtual currency as property for federal income-tax purposes. The ordinary tax principles for property therefore apply to digital assets. A token is not ignored merely because no dollars reached a bank account.

For an investor, the core capital formula is:

Gain or loss = amount realized − adjusted basis of the units disposed of.

The amount realized generally starts with the fair market value received. Basis generally starts with cost, including qualifying acquisition costs. Gifts, inheritances, income receipts, tax-free transactions and prior adjustments can produce a different basis. A report must retain both numbers and the evidence behind them.

What is taxable, non-taxable or fact-dependent?

DeFi deposits, liquidity tokens, wrapped assets, bridges, liquid staking, loans, liquidations and derivatives are fact-dependent. Do not apply “every token movement is a sale” or “all protocol transfers are non-taxable” as universal rules. Identify what legal and economic rights changed.

Short-term versus long-term capital gain

A capital asset held for one year or less generally produces short-term gain or loss; one held for more than one year generally produces long-term gain or loss. Short-term net capital gain is taxed through ordinary-income rates. Net long-term capital gain can use preferential federal rates, subject to the taxpayer's taxable income and the type of asset.

That does not mean “wait 12 months and your rate automatically becomes 15%.” The precise federal rate can be 0%, 15%, 20% or another applicable rate, and the Net Investment Income Tax and state tax may also matter. Holding-period arithmetic, income level, filing status and transaction category all belong in the return calculation.

If crypto is received as income, the income amount and the later capital transaction are separate. For example, a reward worth USD 100 when the taxpayer obtains control can create USD 100 ordinary income and USD 100 initial basis. A later sale for USD 130 can then create a USD 30 capital gain, subject to holding period.

Basis identification is wallet- or account-specific

The old beginner article said the IRS simply uses global FIFO by default. Current rules are more precise. Digital-asset units and unused basis are tracked wallet by wallet or account by account. For a custodial broker, a taxpayer may adequately identify the units sold by communicating the required basis and holding-period information by the transaction deadline. Without adequate identification and outside temporary relief, earliest-acquired units of the same asset in that broker account are treated as disposed first.

This creates a practical checklist:

1. Separate each exchange account and self-custody wallet.
2. Preserve acquisition date, cost and units for every lot.
3. Link own transfers without resetting date or basis.
4. Record any timely specific identification made to a broker.
5. Do not move basis from one wallet to another only to create a preferred gain.
6. Reconcile the tax lot selected with broker information and actual custody.

Revenue Procedure 2024-28 provided transition relief for allocating unused pre-2025 basis to wallets and accounts. It was not permission to continue a single global pool indefinitely. The crypto records checklist shows the fields needed to reproduce a lot decision.

Which federal forms can apply?

“Staking goes on Schedule 1” is not universally correct. Activity, taxpayer status and facts determine whether income is non-business, business, farming or another category. Mining can be a trade or business and may involve Schedule C and self-employment tax; an isolated receipt needs its own analysis.

The Form 8949 guide explains the 2025 digital-asset checkbox groups and adjustment codes. Never map an unresolved transaction to a form merely because the software needs a category.

Form 1099-DA for 2025 does not solve basis

US brokers generally began reporting 2025 gross proceeds on Form 1099-DA. The IRS states that most 2025 statements will not include basis, so the taxpayer still calculates gain or loss. Basis reporting for covered digital assets expands for broker sales after 2025 under the phased rules.

• Compare Form 1099-DA proceeds with the exchange export.
• Do not treat blank basis as confirmed zero basis.
• Use the Form 8949 digital-asset boxes that correspond to whether proceeds and basis were reported.
• Correct differences using the form instructions and support the adjustment.
• Report taxable transactions even when no Form 1099-DA was issued.

Foreign brokers may not issue a US Form 1099-DA, but that does not remove a US taxpayer's reporting obligation. The Form 1099-DA explainer covers broker matching and basis limitations.

Small gains, losses and missing records

The IRS FAQ says taxable digital-asset income, gain or loss must be reported regardless of amount or whether an information return was received. A broker's optional de minimis reporting rule is not a taxpayer exemption. Spending USD 5 of appreciated crypto can still be a reportable disposition.

Capital losses first offset capital gains. If losses exceed gains, an individual can generally deduct up to USD 3,000 of net capital loss against other income—USD 1,500 if married filing separately—and carry the remainder forward under the capital-loss rules. Losses from theft, scams, worthless tokens, bankrupt exchanges and abandoned assets are not automatically ordinary deductions; facts and statutory limitations matter.

When acquisition history is missing, reconstruct transfers, obtain old statements and retain evidence. A zero shown as a technical placeholder should never be described as verified tax basis. The report should mark the row as unresolved and prevent a filing-ready claim until reconciled.

First-time crypto filing workflow

1. Inventory accounts: list every exchange, wallet, protocol and broker used before and during 2025.
2. Export raw data: keep CSV, API snapshots, statements and transaction hashes unchanged.
3. Reconcile transfers: link withdrawals and deposits between owned accounts.
4. Classify events: separate acquisitions, capital disposals, income, gifts, fees, loans, derivatives and open positions.
5. Build wallet-level lots: preserve basis and holding period and document identification.
6. Reconcile information forms: compare Forms 1099-DA, W-2 and other 1099 forms with the ledger.
7. Review exceptions: inspect DeFi, NFTs, bankruptcies, foreign accounts, business activity and missing basis.
8. Prepare forms: generate Form 8949 and Schedule D capital totals, then map confirmed ordinary income.
9. Retain the audit trail: save the final report, source data, exchange rates and explanations.

The US capital-gains guide provides more detail on netting and holding periods. State rules are separate from the federal return and can materially change the final liability.

Frequently asked questions

Official IRS sources

• IRS: digital assets filing hub
• IRS: digital-asset transaction FAQs
• IRS: 2025 Instructions for Form 8949
• IRS: understanding Form 1099-DA
• IRS Revenue Procedure 2024-28: wallet/account basis transition
• IRS Revenue Ruling 2023-14: staking rewards and dominion and control
• IRS Publication 550: capital gains, losses and investment property

Official-source review completed 2 September 2026 for the 2025 federal return. State and local rules are outside this guide.

Disclaimer: This article is for general informational purposes only and does not constitute tax advice. For individual tax advice, consult a licensed tax professional.