Doing your crypto taxes feels complicated until you see the actual steps. There are only six. If you are a typical holder rather than an active trader, our guide to crypto taxes for the average investor covers the simpler path. Figure out what is taxable, gather your records, pick software, reconcile, fill out the forms, and file. Everything else is detail.
This guide walks the whole process end to end, in the order you should do it, so you can do your crypto taxes correctly for 2026 without guessing.
Disclaimer: This guide is for informational purposes only. Always consult a qualified CPA regarding your specific situation.
Quick answer (TL;DR): To do your crypto taxes, first identify your taxable events: selling, swapping, and spending crypto are capital gains, and earning crypto is income. Gather records from every exchange and wallet, import them into software like Koinly or CoinTracker, then reconcile the warnings. Choose a cost basis method (usually FIFO, tracked per wallet for 2025 onward), generate Form 8949 and Schedule D, reconcile any 1099-DA, and file. The math is automatic. The reconciliation is the real work.
Step 1: Figure Out What Is Actually Taxable
Before you touch software, you need to know what the IRS counts. Crypto is treated as property, not currency, so the rules look like stocks more than cash.
Taxable as capital gains (a disposal):
- Selling crypto for dollars
- Swapping one coin for another (yes, crypto to crypto is taxable)
- Spending crypto on goods or services
Taxable as ordinary income:
- Staking and mining rewards
- Airdrops
- Crypto earned as payment for work
Not taxable:
- Buying crypto with cash and holding it
- Moving coins between your own wallets
- Gifting crypto under the annual exclusion (in most cases)
If you want the deeper breakdown of each event type, our guide on how crypto is taxed in the US covers the mechanics and the rates.
Step 2: Gather Every Record From Every Account
This is the step that decides whether your numbers are right. You need the full transaction history from every exchange and wallet you have ever used, not just the ones you use today.
Make a list and pull records from each:
- Exchanges: export your full CSV history, or get a read-only API key for each.
- Wallets: note every public address you control, on every chain.
- Old accounts: the exchange you used once in 2019 still matters, because that is where your cost basis lives.
Step 3: Pick Crypto Tax Software and Import Everything
Doing this by hand across hundreds of transactions is a nightmare. Crypto tax software exists to pull it all together and do the math.
The two most popular options for US filers:
- Koinly: strong with DeFi, NFTs, and multi-chain activity. See our full Koinly review.
- CoinTracker: another solid choice with clean exchange integrations. We compare them in Koinly vs CoinTracker.
Either works for most people. Connect every account by API, CSV, or public address, then let the software fully sync. On a large or multi-chain portfolio the first sync can take a while, so let it finish before you judge the numbers.
Step 4: Reconcile and Choose Your Cost Basis Method
Importing is the easy part. Reconciliation is the real work, and it is where accuracy is won or lost.
Open the warnings panel in your software and work it top to bottom:
- Match internal transfers. Linking a withdrawal from one of your wallets to the deposit in another removes a phantom sale and a phantom buy in one move. This fixes a surprising amount.
- Resolve missing cost basis. Connect the missing source account or enter the original purchase. Never leave a disposal at zero basis unless the asset truly had none.
- Correct DeFi and NFT labels. Confirm swaps, liquidity moves, staking rewards, and airdrops are tagged with the right treatment.
A user was convinced his software was broken because it showed a five-figure gain on a year he barely traded. The cause was three unmatched transfers between his own wallets. The software had counted each move out as a taxable sale. Matching the transfers dropped his reported gain to what it actually was. The software was right. The data was just incomplete.
Once your data is clean, lock in your cost basis method. Most US filers use FIFO, which the IRS treats as the default. HIFO is allowed if you keep consistent records.
One critical 2025 change: under Rev. Proc. 2024-28, the IRS now requires per-wallet cost basis tracking and has ended universal pooling. A one-time safe-harbor allocation locks in on your 2025 return (filed in 2026). Confirm your software applies per-wallet basis, and read our per-wallet cost basis guide before you file.
Step 5: Fill Out Form 8949 and Schedule D
Once warnings are cleared and balances reconcile, generate your forms. For US filers that means:
- Form 8949: lists every individual disposal with its date, proceeds, cost basis, and gain or loss.
- Schedule D: summarizes your short-term and long-term totals from Form 8949.
Your software produces both automatically once the data is clean. Our walkthrough on filing Form 8949 and Schedule D shows exactly how the numbers flow.
Your ordinary crypto income (staking, mining, airdrops, payment) does not go on Form 8949. It goes on Schedule 1 or Schedule C depending on whether it is a hobby or a business, reported at the fair market value when you received it.
Step 6: File Your Return
Attach your completed forms to your 1040 and file. You have three paths:
- File yourself with TurboTax or similar, using your software export.
- Hand it to a preparer with an accountant-ready file.
- Use a done-for-you crypto tax service that reconciles and files for you.
Remember the boundary: your software generates the forms, it does not file them. Koinly and CoinTracker are reconciliation engines, not filers.
Want the Guided Version?
Following these six steps gets most people a clean, defensible return. If you would rather be walked through every screen, with the exact fixes for the warnings that cause the most damage, that is what our course is for.
Do your crypto taxes the right way
The DIY Crypto Tax Course on Koinly walks you through this entire process step by step, built by former Big 4 accountants. Self-paced, lifetime access.
- Connect every wallet and exchange the right way
- Fix cost basis, DeFi labels, and missing history
- File Form 8949, Schedule D, and Schedule 1 with confidence
If you want to go deeper on the rules behind each step, start with our complete crypto tax guide for 2026, or learn the software itself in our how to use Koinly tutorial. And if your account is past the point of self-service, a done-for-you crypto tax service can reconcile and file it for you.
For the official source, the IRS digital asset guidance lays out the reporting rules in plain terms, and Koinly’s official help docs cover the import and reconciliation steps in detail.
Key Takeaways
- Bottom line: the math is the easy part. The whole game is feeding the software complete, correctly labeled data so the gain it calculates is the real one
- Start with completeness. Pull records from every account you ever touched, because one missing wallet is what silently inflates your basis
- Spend your time on reconciliation, not data entry: match transfers, fix zero-basis lots, and label DeFi consistently before you trust the report
- Mind the 2025 and 2026 rules. Apply per-wallet basis under Rev. Proc. 2024-28 and reconcile every Form 1099-DA against your real purchase history
- Decision point: the software stops at generating Form 8949 and Schedule D. From there you either file it yourself or, if the cleanup is beyond you, hand it to a crypto tax service
Frequently Asked Questions
Do I have to report crypto on my taxes?
Yes. The IRS treats crypto as property, and the digital asset question sits right at the top of Form 1040. You must report sales, swaps, spending crypto, and any crypto earned as income. Buying and holding is not taxable, but you still answer the digital asset question truthfully. Ignoring it is how people end up with IRS letters and penalties.
What crypto activity is actually taxable?
Selling crypto for cash, swapping one coin for another, and spending crypto on goods or services are all taxable disposals that create capital gains or losses. Earning crypto from staking, mining, airdrops, or as payment is ordinary income at its fair market value when you receive it. Simply buying and holding, or moving coins between your own wallets, is not taxable.
How do I calculate my crypto gains?
For each disposal, subtract your cost basis (what you paid plus fees) from the proceeds (what you received). The result is a capital gain or loss. Held under a year, it is short-term and taxed as ordinary income. Held over a year, it is long-term and taxed at lower rates. Crypto tax software does this math across every transaction once your data is clean.
Can I do my crypto taxes myself?
Yes, most people can. The workflow is: gather records, import into software, reconcile the warnings, generate Form 8949 and Schedule D, and file. The hard part is reconciliation, not the math. Our DIY Crypto Tax Course on Koinly walks you through the entire process so you avoid the mistakes that inflate your gain. Large or messy portfolios may still want a professional review.
What is the best crypto tax software?
Koinly and CoinTracker are the two most popular options for US filers. Both connect to exchanges and wallets, reconcile your history, and generate Form 8949 and Schedule D. Koinly tends to handle DeFi and multi-chain activity well. The right choice depends on your transaction volume and the chains you use, but either works for most people once you learn to reconcile properly.
What cost basis method should I use for crypto?
Most US filers use FIFO, which the IRS treats as the default. HIFO is allowed if you keep consistent records and can document it. As of 2025, the IRS requires per-wallet cost basis tracking under Rev. Proc. 2024-28, which ends the old universal pooling approach. Pick a method you can apply consistently, document it, and get a second opinion if your portfolio is large.
Do I need to worry about Form 1099-DA?
Yes, starting with your 2025 transactions. Brokers send Form 1099-DA in early 2026 reporting gross proceeds only, often with blank or zero cost basis. That makes a sale look like pure profit. You reconcile the 1099-DA against your real purchase history in your software so you only pay tax on actual gains. Cost basis reporting on covered assets begins for 2026 transactions, with forms arriving in early 2027.
What happens if I do not report my crypto?
Exchanges now report to the IRS through Form 1099-DA, so unreported activity is increasingly visible. Failing to report can trigger IRS letters (6173, 6174, 6174a), back taxes, interest, and penalties. If you are behind, the fix is to reconcile your full history and file accurate amended returns rather than wait for a notice.