Theres a new tax form coming your way for the 2025 tax year.
Form 1099-DA will make filing your capital gains taxes on cryptocurrencies and other digital assets easier.
Heres what you should probably know.
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Do You Have to Pay Taxes on Crypto?
Yes, you must pay taxes on crypto and other digital assets.
Digital assets are taxed as property, which means acquiring them isnt a taxable event.
However, when you sell the asset, thats when taxes kick in.
If you sell it for less, youll incur a loss.
Andrew Gordon, Esq.
and CPA ofGordon Lawsaid there is one notable exception.
If you buy something with cryptocurrency, that counts as a sale.
That means spending your crypto is also a taxable event.
Crypto is hardly the only digital asset.
You should determine if the asset is stored on a digital ledger.
If it is, then you have a digital asset.
If you sell cryptocurrency in 2025, you should expect to receive a 1099-DA in early 2026.
Flores said this will be added on the 1099-DAs you receive in early 2027 for the 2026 tax year.
Theres still going to be some math involved on your end.
That means youre going to want to usetax softwarethats capable of managing information about digital assets.
Or, even better, get help from a tax professional who specializes in crypto and other digital assets.
You sure do have to pay taxes on crypto even if you dont get a 1099-DA in the mail.
The same goes for sales of any other digital assets.
This has always been true.
Voluntarily amending your returns can help [you] avoid potential penalties and interest.
Many platforms provide a detailed log that may be imported as part of tax preparation, she said.
Any crypto sales (and any subsequent reinvestments) will not be taxed right away.
Youll only be taxed on the gains when you withdraw them from the retirement account entirely.
Hopefully you wont do that until youre age 59 12 so you dont incur any early withdrawal penalties.
Not all retirement accounts are taxed in the same way.
Then, you pay taxes on the gains when you make a withdrawal.
For that reason, Gordon likes Roth IRAs for cryptocurrencies in many cases.
Its always important to note that everyones personal tax situation is different.
Before deciding which retirement account is best for your investment strategy, talk with a tax professional.
Its also important to note that crypto is a risky investment.
Its even riskier than stocks in most cases, especially if youre used to doingindex fund investing.
You might not want digital assets in your retirement account at all.
If the bill makes it through that process, then the president can either sign or veto it.
If the president signs it, thats when it becomes law.
It is highly likely well see a new tax bill this year.
Much of theTCJA expires at the end of 2025.
Its even possible though hardly certain that any new tax bill would alter the way cryptocurrencies are taxed.
But for the time being, the current rules apply.
Whether that asset originates from an American company or not.
She is a regular contributor to The Penny Hoarder.
