New to Crypto? What You Need to Know for Tax Season
Cryptocurrency has opened up a whole new world of digital finance, and with it, a whole new layer of tax complexity.
Whether you’re trading Bitcoin, farming DeFi yields, minting NFTs, or just dabbling on Coinbase, the IRS considers crypto a form of property. That means many of your transactions are taxable, even if you didn’t receive a 1099.
At Wise.CPA, I specialize in helping clients stay compliant without the confusion. Here’s a quick primer on what you need to know.
📌 What Counts as a Taxable Event?
You owe tax when you dispose of cryptocurrency — meaning when you:
- Sell it for fiat (like USD)
- Trade it for another crypto (even stablecoins)
- Spend it on goods or services
- Receive it as income (from mining, staking, or payment)
Even if you never touched a bank account, these transactions may still generate capital gains or income tax.
🤔 What If I Just Bought Crypto?
Good news: simply buying and holding crypto is not taxable.
But once you sell or trade it, you’ll need to calculate your cost basis and the resulting gain or loss. That’s where accurate records become essential.
📉 Why Recordkeeping Matters
Unlike stock trades, most crypto platforms don’t provide complete tax forms, especially if you’ve moved assets between wallets or exchanges.
That’s why it’s important to:
- Keep track of dates and values for every buy/sell/trade
- Save records from all exchanges and wallets
- Use crypto tax software or work with a professional
🧠 Terms You Might See
- Cost Basis – What you paid for the crypto, including fees
- Capital Gain – Profit from selling or trading crypto
- Ordinary Income – Income from mining, staking, or airdrops
- Form 8949 – Where crypto sales get reported on your tax return
- Form 1099-DA – A new form (coming soon) for digital asset reporting
🔍 Common Crypto Situations I Help With
- Trading across multiple exchanges
- DeFi transactions like staking, liquidity pools, and yield farming
- NFT creation and sales
- Airdrops, forks, and token conversions
- Reconciling missing or messy records
- International exchanges or wallets
📲 Ready to Simplify?
Crypto tax doesn’t have to be overwhelming — and you don’t have to explain your MetaMask transactions to a traditional accountant.
At Wise.CPA, I work with crypto users across all levels, from hobbyists to high-volume traders. I offer paperless, flat-fee tax prep and stay up-to-date on evolving IRS rules so you don’t have to.
Have questions about your wallet, exchange, or DeFi activity? Let’s talk.