How to Report Crypto on Form 8949

You report crypto sales and trades on IRS Form 8949, then summarize the totals on Schedule D, which flows to Form 1040. This is educational only, not tax advice. Because the IRS treats crypto as property, every sale, crypto-to-crypto trade, or purchase of goods with crypto is a disposal that belongs on Form 8949.

Form 8949 lists each individual crypto disposal with its dates, proceeds, cost basis, and gain or loss. Schedule D summarizes those entries — it nets short-term and long-term results, applies any loss carryforward, and produces the total that flows to Form 1040. In short, Form 8949 has the detail and Schedule D has the summary.

Form 1099-DA is a new IRS form that digital asset brokers must issue starting with 2025 transactions, with the first forms arriving in early 2026. For 2025 it generally reports gross proceeds only. Cost basis reporting is scheduled to begin with 2026 transactions. The IRS matches 1099-DA data against your Form 8949, so your figures should reconcile.

Yes. Trading one cryptocurrency for another is a taxable disposal of the coin you gave up, so it belongs on Form 8949. You report the fair market value received as proceeds and subtract your cost basis to find the gain or loss. This is true even though no US dollars changed hands, because crypto is property.

Short-term disposals, meaning crypto held one year or less, go in Part I of Form 8949 and are taxed at ordinary income rates. Long-term disposals, held more than one year, go in Part II and qualify for the lower 0/15/20% capital-gains rates. Both parts then feed Schedule D, which nets the totals.

A mismatch between your Form 8949 and a broker's Form 1099-DA can trigger an IRS CP2000 notice through the Automated Underreporter system, without a full audit. The notice proposes additional tax based on the difference. You can respond with your records — often the gap is missing cost basis that the 1099-DA did not report for 2025 transactions.

US-facing centralized brokers and exchanges that meet the IRS's digital-asset broker definition — including Coinbase, Robinhood, and Kraken — must issue Form 1099-DA on digital asset sales starting with 2025 transactions. Self-custody, non-custodial wallets and apps (for example Phantom) generally don't issue any 1099, since they never take custody of your funds or your identity the way a broker does. Separately, some platforms issue a Form 1099-MISC for staking rewards, referral bonuses, or other crypto income once it reaches $600 in a year — but that $600 figure is only the threshold for the platform to send you a form. You legally owe tax on all taxable crypto income and gains regardless of amount, including a single dollar of income or a disposal a broker never reports at all; there is no $600 minimum before tax is owed.

DIY works well if your activity is simple — a handful of trades on one or two exchanges that a tool like the free crypto tax tools we round up separately can categorize cleanly, or if you're comfortable importing a summary into TurboTax's crypto import feature yourself. A professional is worth the cost once your situation gets messy: DeFi activity across many protocols, staking or airdrop income mixed with trading, missing cost basis from old or defunct exchanges, or a notice from the IRS you don't know how to answer. Specialist crypto tax preparers exist specifically for this — firms like CryptoTaxGirl focus on crypto-only returns — and cost more than a generic preparer but usually less than the time (and risk of errors) of untangling complex on-chain activity yourself. This is educational only, not tax advice; the right choice depends on your specific transaction complexity.

Most crypto tax scrutiny starts as an automated mismatch, not a full audit: the IRS's Automated Underreporter system compares the income and proceeds reported on broker 1099-DA and 1099-MISC forms against what you filed, and a gap generates a CP2000 notice proposing additional tax — this is a computer-generated letter, not evidence you did anything wrong. A full audit is less common and more likely with large, unexplained discrepancies, unreported exchange or DeFi income, or simply random selection. If you receive a CP2000, read it carefully, compare it against your own records, and respond by the deadline stated — often the gap is just missing cost basis the broker didn't report. Keep dated records of every disposal and income event so you can respond with documentation rather than guesswork, and consult a tax professional if the proposed amount is large or you're unsure how to respond.

Yes. Because the IRS treats all crypto, including stablecoins like USDT and USDC, as property under Notice 2014-21, converting USDT to USD is a disposal that belongs on Form 8949 just like selling BTC or ETH. The twist is that USDT is designed to hold a 1:1 peg to the dollar, so the taxable gain or loss on a normal conversion is usually at or near zero — you report the disposal, but there's typically little or nothing to actually tax unless the peg deviated between when you acquired and when you converted the USDT. This is educational only, not tax advice: keep records of every USDT acquisition and conversion the same way you would for any other crypto, since the reporting requirement applies regardless of how small the resulting gain or loss is.