Cryptocurrency is treated as property by the IRS, meaning every sale, trade, or use of crypto to purchase goods or services is a taxable event. With increased IRS scrutiny, proper reporting has never been more important.
What Is a Taxable Event?
- Selling crypto for fiat currency (USD)
- Trading one cryptocurrency for another
- Using crypto to pay for goods or services
- Receiving crypto as payment for work (ordinary income)
- Mining or staking rewards
Short-Term vs. Long-Term Gains
If you held the crypto for one year or less, gains are taxed as ordinary income. Hold for more than a year and you qualify for the lower long-term capital gains rate (0%, 15%, or 20% depending on your income).
Form 8949 and Schedule D
All capital gains and losses from crypto must be reported on Form 8949 and summarized on Schedule D of your tax return. TaxFlow automatically generates these forms from your imported transaction history.
Record Keeping
Keep detailed records of every transaction including date, amount, cost basis, and fair market value at the time of the transaction. TaxFlow's crypto dashboard handles this automatically when you connect your exchanges.
