How to File Crypto Taxes in the U.S. for the 2024-2025 Tax Season: A Comprehensive Guide

Cryptocurrency investments in the US can be exciting, but tax reporting remains a challenge for many crypto investors. With the 2024–2025 tax season quickly approaching, it's crucial to understand your tax obligations. The deadline to file your 2024 tax return is April 15, 2025, and proper reporting of all crypto-related transactions will help you avoid penalties and stay compliant with the IRS.

This guide will break down everything you need to know about crypto taxes in the US, including taxable events, tax rates, key forms, and step-by-step instructions to ensure accurate tax filing.

How Does the IRS Tax Crypto?

The IRS classifies cryptocurrencies as property, which means crypto is subject to capital gains tax when you sell, trade, or use it. For short-term capital gains (crypto held for less than a year), tax rates range from 10% to 37% based on your income bracket. For long-term capital gains (crypto held for over a year), the tax rates are 0%, 15%, or 20% depending on your income.

Learn more about IRS crypto taxation here.

• Capital Gains Tax: Applies to selling, trading, or using crypto to purchase goods and services.

• Income Tax: Applies to crypto earned through mining, staking, airdrops, or crypto received as payment for work.

How Crypto Tax Rates Work in the US

Short-Term vs Long-Term Capital Gains

The key distinction in crypto tax rates is based on how long you hold your assets. If you sell your crypto within a year, the gains are taxed as ordinary income (10% to 37%). However, holding crypto for longer than a year qualifies for lower long-term capital gains tax rates (0%, 15%, or 20%).

For example, if you bought Ether (ETH) for $1,000 and sold it for $1,200 after holding it for over a year, your $200 profit would be taxed as a long-term capital gain.

Understanding Crypto Airdrops and Their Tax Implications

Airdropped tokens are taxed as ordinary income based on their fair market value at the time they’re received. If you sell or trade the airdropped tokens later, you'll incur capital gains tax based on the difference between their value when received and the sale price.

Gifting Crypto: What You Need to Know

While gifting cryptocurrency is generally not a taxable event, the giver may have to report it on a gift tax return if the value exceeds $18,000 for a single recipient in 2024. Additionally, the recipient may have to calculate capital gains or losses when they sell the gifted crypto based on the giver’s original cost basis.

Essential Forms for Filing Crypto Taxes in 2024

Here are the key forms you’ll need to file your 2024 tax returns related to cryptocurrency transactions:

Form 8949: Report capital gains and losses from crypto sales and trades.

Schedule D (Form 1040): Summarize total capital gains and losses from Form 8949.

Schedule 1 (Form 1040): Report income from staking, airdrops, mining, and other crypto earnings.

Form 1099-MISC: Issued for mining, staking, or crypto payments over $600.

Form 1040: The main tax return form for all types of income, including crypto.

FBAR (FinCEN Form 114): File if you have foreign crypto accounts exceeding $10,000.

Step-by-Step Guide to Filing Crypto Taxes for 2024–2025

• Gather All Crypto Transaction Records: Collect data from wallets, exchanges, and blockchain explorers. Include the transaction date, amounts, and US dollar value at the time of the transaction.

• Identify Taxable Events: Determine which crypto transactions are taxable, such as selling, trading, or earning crypto. Non-taxable events include buying or transferring crypto between wallets.

• Calculate Capital Gains and Losses: Subtract your cost basis from the proceeds (fair market value at disposal). Report gains or losses using the appropriate forms.

• Calculate Crypto Income: Report mining, staking, and airdrop income as ordinary income.

• Apply the Standard Deduction: Reduce your taxable income by the standard deduction for your filing status. This will lower your overall tax liability.

• Determine Your Tax Rate: Apply the appropriate tax rates based on the duration of your holdings and your overall income.

• Complete the Required Forms: Fill out Form 8949, Schedule D, and Form 1040. Use Schedule 1 for staking and airdrop income.

• File Your Return by April 15, 2025: Submit your return either via IRS e-file or by mail. If you need more time, file Form 4868 for an extension.

File your taxes with the IRS e-file system

Key Dates and Deadlines for the 2024–2025 Tax Season

• January 31, 2025: Some exchanges may issue 1099 forms.

• April 15, 2025: Deadline to file your 2024 tax return.

• January 31, 2026: Expect Form 1099-DA for 2025 crypto transactions.

IRS Crypto Tax Penalties: What Happens If You Don’t Report or Underreport?

Failing to report crypto earnings or transactions can lead to penalties. The IRS may charge late fees, interest, and even impose criminal penalties for serious cases of fraud or misreporting. Be sure to file on time and report all income to avoid these penalties.

Learn about IRS penalties for misreporting crypto taxes.

New IRS Crypto Tax Rules for 2025

In 2025, new rules will require specific identification of assets sold for tax reporting. Tracking your cost basis (the original amount paid for crypto) accurately will be more important than ever to prevent double taxation. The IRS also plans to introduce Form 1099-DA to report digital asset transactions.

By following this guide and ensuring you’re accurately tracking all crypto transactions, you’ll be better prepared to file your taxes and avoid any issues with the IRS.