Crypto tax rules every investor needs to know

Crypto gains and losses are taxable—here's how to report them properly.

Transcript

00:00A common question we see from people is, are my crypto gains and losses really reportable?

00:05Are those gains really taxable? So there's a couple things to focus on. And the answer is yes.

00:10It is not magical, non-taxable income. Crypto gains from sales and other transactions like that

00:16are taxable. Here's the second piece. It's starting for 2025. If you have a sale on most

00:25crypto exchanges, they're going to issue you what's called a new form, what's called a form 1099-DA,

00:31which stands for digital asset. Not only are you going to get that form to help you report your

00:36transactions, the IRS and possibly your state is going to get a copy as well. Even if you don't

00:42get a 1099, all of those transactions are taxable. So you want to make sure you have your records.

00:48So you're only paying tax on the actual amount of gain and not the gross sales price. Crypto gains

00:54and losses are treated as property. And what that means is generally when you have a sale,

00:59you're going to report it as a capital gain or loss. The gain or loss being what you paid for that asset.

01:05You're going to subtract that from the gross sales proceeds to determine your gain. So yeah,

01:09those are generally going to be taxed as capital gains, somewhat similar to stock,

01:13but there are some important differences. For crypto investors, the key things you need to be

01:18aware of is one, for 2024 and prior years, those gains are taxable, even if you didn't get a 1099

01:25from your platform. You also want to know, hey, you may have traded across several platforms,

01:31you may want to use a tool to help aggregate your gains and losses, because sometimes you may,

01:37you know, heavy investors move their crypto around at times between those wallets. In some of those

01:42transactions, if you're simply picking up a cryptocurrency and moving it from one platform

01:48or wallet to another, that's not taxable. Now, if you're selling it or you're using crypto to

01:53actually buy something, those surprisingly on that second one, those are taxable transactions.

01:58So understanding what records do I need and what transactions are really taxable are incredibly

02:04important if you're a crypto investor.