Which forms a crypto investor files

A crypto sale can involve four IRS forms. Form 8949 lists each sale with its dates, proceeds, cost basis and gain or loss. Schedule D (Capital Gains and Losses) collects the totals from Form 8949. A broker files Form 1099-DA with the IRS and sends you a copy. Form 1040 carries the result and asks the digital asset question.

The holding period sets the term of each sale. A gain is long-term if you held the asset for more than one year. A gain is short-term if you held the asset for one year or less. Count from the day after the day you got the asset. Net short-term gains are taxed as ordinary income.

If your capital losses are larger than your gains, up to $3,000 of the net loss reduces other income. The limit is $1,500 if you are married and file separately. You carry the rest of the loss forward to later years.

Form 8949 boxes G to L for digital assets

The 2025 Form 8949 adds six boxes for digital assets. Part I holds short-term sales. Part II holds long-term sales. The IRS says not to use box C or box F for digital assets.

Crypto tax tools can fill these boxes for you. Before you file, check that the export puts each sale in the box that matches your 1099-DA.

Form 1099-DA for 2025 sales

Brokers file Form 1099-DA for digital asset sales on or after Jan 1, 2025. Brokers did not have to report your cost basis for 2025 sales. Your own records, or your crypto tax tool, must supply the basis.

The IRS gave brokers penalty relief for the 2025 forms, which they file and send in 2026. The relief applies when the broker makes a good faith effort to report accurately (Notice 2024-56). Compare each 1099-DA with your own records.

Some transaction types can be missing from the form. Until further guidance, Notice 2024-57 says that brokers do not have to report six types: wrapping and unwrapping, liquidity provider, staking, lending, short sale and notional principal contract transactions. Staking rewards are still income. Under Rev. Rul. 2023-14, you include their fair market value in income when you gain "dominion and control" over them.

Cost basis reporting from 2026

For sales on or after Jan 1, 2026, brokers must also report basis for covered securities. A covered security is a digital asset that you acquired after 2025 in an account where the broker provided custodial services. The asset must stay in that account until you sell it.

Two groups fall outside that definition. Assets that you acquired before 2026 are noncovered. Under the same definition, a coin that you bought on another platform and then moved into the account is also noncovered, because you did not acquire it in that account. For noncovered assets, a broker may report basis, but it does not have to.

The box rules on this page come from the 2025 Form 8949 instructions. Read the 2026 form and its instructions before you file a 2026 return.

DeFi broker rule repeal and backup withholding

On Dec 30, 2024, the IRS published a rule that made some DeFi front-end services report as brokers. Congress disapproved that rule under the Congressional Review Act. The resolution, H.J.Res.25, became Public Law 119-5 on Apr 10, 2025. The law says that the rule "shall have no force or effect". Treasury and the IRS removed the rule from the Code of Federal Regulations on Jul 11, 2025.

Brokers also do not apply backup withholding to digital asset sales in 2025 or 2026. Notice 2025-33 says that backup withholding "will not be required on any digital asset sale effected by a broker" in those two calendar years. The notice extends the earlier relief in Notice 2024-56 by one year.

Cost basis per wallet

From Jan 1, 2025, you match sales to basis inside each wallet or account. Specific identification or FIFO applies per wallet or account, under Treas. Reg. §1.1012-1(j). FIFO means first in, first out: the oldest units in that wallet count as sold first.

Rev. Proc. 2024-28 gave a safe harbor for the change. You could allocate your unused basis to your wallets in a reasonable way as of Jan 1, 2025. A specific-unit allocation had to be complete before the earlier of two dates. The first date is your first 2025 sale of that asset. The second date is the due date of your 2025 return, with extensions. For most filers with an extension, that due date was Oct 15, 2026. A global allocation method had to be written in your books before Jan 1, 2025.

A broker reports basis only for covered securities in its own custodial account. Your crypto tax tool must track basis in each wallet to fill Form 8949 correctly.

The Form 1040 digital asset question

Form 1040 has a Yes or No question about digital assets. The 2025 form asks: "At any time during 2025, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?"

Under the 2025 wording, a sale, an exchange or a staking reward means that you answer Yes. The IRS digital assets page says that you must answer Yes or No on federal income tax returns. Read the exact wording on the 2026 form when you file your 2026 return.