Money Basics

Own Crypto? What the Tax Return Question and Form 1099-DA Mean for You

By Lena Ortiz / November 10, 2026

If you own some crypto next to your 401(k), your mortgage and the kids’ tuition, three things matter at tax time. First, the digital-asset question on Form 1040 must be answered Yes or No by every filer. Second, the IRS treats crypto as property, so selling or spending it can create a taxable gain or loss. Third, Form 1099-DA is the new statement that crypto brokers send, starting with sales in 2025. None of this needs a spreadsheet wizard. It needs a few records and a clear head. This guide covers the rules as the IRS states them, in plain numbers.

Key takeaways

The IRS says you answer “No” if you only held crypto, bought it with dollars, or moved it between your own wallets (without paying a fee in crypto). Selling, spending, trading or earning it means “Yes.”
Brokers report gross proceeds for sales on or after January 1, 2025, and basis for certain sales on or after January 1, 2026.
A 1099-DA does not replace your records. Basis may be blank for assets bought before 2026.
You answer the 1040 question whether or not you received a 1099-DA.
Small trades count. “I only swapped a little” is not an exemption.

The question at the top of the return

The IRS digital-assets page says the question appears on Form 1040 and several other returns. It asks whether, at any time during the tax year, you received digital assets as a reward, award or payment for property or services, or sold, exchanged or otherwise disposed of a digital asset or a financial interest in one. You check Yes or No. Check the current year’s form for the exact wording and location.

When the IRS says answer Yes

You received digital assets as payment for goods or services.
You received them as a reward or award, through mining or staking, or through an airdrop tied to a hard fork.
You sold digital assets for dollars or other currency.
You exchanged one digital asset for another.
You used digital assets to buy goods or services.
You paid a transfer fee in digital assets.

When the IRS says answer No

You did not own any digital assets.
You only held them and did not transact during the year.
You bought them with real currency and did not sell any.
You moved them between wallets or accounts you control, with no transfer fee paid in digital assets.

The 2025 Form 1040 instructions add that you must answer the question whether or not you received a Form 1099-DA. A Yes answer is not a tax bill. It is a prompt to report whatever gain, loss or income resulted.

Why selling or spending crypto matters: property treatment

The IRS says that for federal tax purposes, digital assets are property, not currency. That is the same bucket as stock or a collectible. When you dispose of property, you compare what you received to your cost, called your basis. The difference is a gain or a loss.

Basis is generally what you paid, including fees and acquisition costs, in U.S. dollars. If you received crypto for services, the IRS FAQ says basis is the dollar value when you received it. Holding for one year or less produces a short-term result, and more than one year produces a long-term result. The holding period begins the day after you receive the asset.

Sales of digital assets held as capital assets are reported on Form 8949, according to the IRS. Income such as staking or mining rewards goes on other forms, such as Schedule 1. Which form applies is a question for the instructions or a preparer.

What Form 1099-DA is

The IRS titles it “Digital Asset Proceeds From Broker Transactions.” It is the crypto counterpart to the 1099-B that stock brokers send. The people who file it are brokers. In the instructions, that includes those who effect sales of customers’ digital assets as an agent, dealer or middleman. The IRS says the final rules cover operators of custodial trading platforms, certain hosted wallet providers, digital asset kiosks and certain payment processors. Brokers that never take possession of the assets, such as decentralized or non-custodial ones, are excluded for now, and the IRS says they will be addressed in separate regulations.

The schedule

Transactions on or after January 1, 2025: brokers report gross proceeds.
Transactions on or after January 1, 2026: brokers also report basis for “covered” assets, which the instructions describe as generally those acquired after 2025 in a custodial account.
Assets acquired before 2026: basis reporting is voluntary. Box 1g may be blank, and the IRS says you determine basis from your own books and records.

The proceeds box (1f) is gross proceeds reduced by fees and similar costs, and box 1g is the cost basis. The instructions list small-sale exceptions: payment processors need not report if a customer’s sales are $600 or less for the year, specified NFTs have a $600 limit, and qualifying stablecoin sales have a $10,000 limit. Because those limits depend on facts the instructions define, read them before assuming you will not receive a form.

For 2025 sales, the IRS reports it published corrections to the 1099-DA instructions on January 7, 2026, covering de minimis rules and optional reporting methods. The details change, so check the IRS page rather than relying on an old summary.

Example math (illustrative only)

The numbers below are invented to show how gain and loss work. They are not tax figures for anyone and not a prediction.

Step	Example	Result
Bought 0.10 units for $3,000, fee $30	Basis = $3,000 + $30	$3,030
Sold the units 14 months later for $3,900, fee $40	Proceeds = $3,900 – $40	$3,860
Gain	$3,860 – $3,030	$830, long-term
Spent a different lot worth $200 on a purchase; basis $260	$200 – $260	-$60 loss
Moved units between your own wallets	No sale	No gain or loss

Notice the second row from the bottom: spending crypto is a disposal, even on a $200 appliance. And the last row is the IRS’s own position that moving crypto between wallets you control is not taxable.

One more note on the math: a loss is not a refund on its own, and the example ignores the tax rate entirely, because rates depend on your income and filing status. That part belongs to the return instructions or a preparer.

Records worth keeping

The IRS says to keep records sufficient to support what you report, and lists the basics to track for each acquisition: the type of asset, the date and time, the number of units, and the dollar fair market value when acquired. For sales, add the date, units, value and basis. Report digital asset transactions whether or not they produce a gain or loss.

Specific unit tracking matters too. The IRS FAQ says you may choose which units are sold if you can identify them and prove their basis. Without that, units are treated as sold first in, first out. Revenue Procedure 2024-28 lets taxpayers allocate unused basis units to the units remaining in each wallet or account as of January 1, 2025. A tax professional can explain how that applies to your setup.

Common mistakes

Forgetting small trades. Every swap and every spend counts.
Mixing up basis across wallets and exchanges. Pre-2026 holdings may arrive with a blank basis box.
Treating a 1099-DA as complete. It covers only what that broker saw.
Answering “No” because you “didn’t cash out.” A swap or a purchase made with crypto is a disposal.
Believing the scam letters. The IRS says it does not require crypto registration, and letters with a QR code asking you to register on a “compliance portal” are scams.

Checklist for your tax folder

List every exchange, app and wallet you used this year.
Download the year-end transaction history from each platform.
Note the date, units and dollar value for each acquisition.
Mark each sale, swap or purchase made with crypto.
Keep any Form 1099-DA, and compare it with your own list.
Record fees paid, since they affect basis and proceeds.
Write down how you chose which units were sold.
Decide the Yes or No answer using the IRS list above.

When to bring in a professional

Consider a tax professional when you have many transactions, income from staking or mining, assets received as gifts, missing basis, or a 1099-DA that does not match your records. A professional can apply the rules to your facts. This guide cannot.

Frequently asked questions

I only bought crypto and never sold. What do I answer?

According to the IRS, buying with real currency and not selling, or only holding, is a No.

Do I need a 1099-DA to report a sale?

No. The Form 1040 instructions say to answer the question whether or not you got one, and gains and losses are reported either way.

Is moving crypto from an exchange to my own wallet a sale?

The IRS FAQ calls a transfer between your own wallets or accounts a non-taxable event. Keep the records, though.

What if the 1099-DA shows no cost basis?

The IRS says box 1g may be blank for older assets, and that you determine basis from your own books and records.

Before you decide

Crypto is a small line in most household budgets and a large source of tax confusion. Think of the folder as insurance against a bad memory in March: ten minutes a month beats a weekend of detective work. Start your records now, not in April, and ask a tax professional about anything that does not fit a box. Rules and forms are updated, so check IRS.gov for the current year before filing.