USA Cryptocurrency Tax FAQ (2025 Guide)
🟢 General Basics
1. What is cryptocurrency tax in the USA?
Cryptocurrency tax in the USA refers to how the IRS classifies crypto as property. Any sale, trade, or earning in crypto creates a taxable event.
2. Does the IRS consider cryptocurrency as currency or property?
The IRS treats crypto as property rather than legal tender. This means it’s taxed similar to stocks, not like cash.
3. Do I have to pay taxes if I just buy and hold crypto?
No, simply buying and holding cryptocurrency is not taxable until you sell, trade, or spend it.
4. When do I owe taxes on cryptocurrency?
You owe taxes on crypto when you sell for fiat, trade coins, or use crypto to buy goods or services.
5. Is crypto-to-crypto trading taxable?
Yes, trading one cryptocurrency for another is a taxable event. You must calculate gain or loss at the time of the swap.
6. Do I have to report crypto even if I didn’t sell it?
Yes, if you earned crypto (from mining, staking, or payments), it counts as taxable income even if you didn’t sell.
7. What is the difference between realized and unrealized gains in crypto?
Realized gains are profits after selling or trading. Unrealized gains are paper profits from holding crypto, which are not taxable.
8. What tax form do I use for reporting crypto?
You typically use Form 8949 and Schedule D for capital gains, and Schedule 1 or C for income from mining, staking, or payments.
9. Do I need to answer “Yes” on the IRS Virtual Currency question?
Yes, if you engaged in any crypto transactions (buying, selling, trading, or earning), you should answer “Yes.”
10. Does the IRS track cryptocurrency transactions?
Yes, the IRS uses exchange reports, blockchain analysis, and third-party 1099 forms to track crypto activity.