By Terry Carter · Trunkline. Plain-English crypto-tax basics so you are not blindsided. Every figure has a source and a date. This is education only. NOT tax advice. For your own return, use a crypto-literate CPA. Do not guess with the IRS.
Why this one matters
The system counts on you not knowing the rules. Crypto taxes are one of the easiest places for a regular person to either overpay by accident or get a scary letter a year later. Here is the plain version, what actually changed, the one trap that makes people overpay, and the single habit that protects you.
What changed (dated)
- The IRS treats crypto as property, not money. That means every time you sell OR spend it, it is a taxable event, buy a coffee with crypto and technically you owe tax on the gain. Most people have no idea.
- The new Form 1099-DA is live, exchanges now report your crypto activity to the IRS, just like a brokerage reports stocks.
- Cost-basis tracking started January 1, 2026. The first full filing season under these rules is the Q1 2027 tax season.
The trap that makes people overpay, the “$0 basis” trap
Here is the one to remember: move your own coins between your own wallets, and it can get reported with a $0 cost basis, making it look like 100% profit. So the IRS sees “pure gain” and you overpay, unless you keep your own records. Moving your own crypto between your own wallets is not a sale, but it can still show up on a report. Your records are what set the story straight.
What to do (one habit)
Start one simple log today: date · what you did · the dollar value at the time. Every buy, sell, spend, and transfer. That is it. Future-you, and your CPA, will be grateful, and it is the single thing that keeps the $0-basis trap from costing you.
Don’t believe the hype (or the fear)
- “Crypto is anonymous to the IRS.” → Not anymore. 1099-DA means exchanges report you.
- “If I just hold, I owe nothing.” → Holding is fine; it is selling or spending that is taxable. Know the difference.
- “A tax app does it all for me.” → Tools help, but the IRS holds you responsible. Keep your own log and use a real CPA for your return.
The receipts (sources & dates)
- Crypto taxed as property; every sale/spend is a taxable event. IRS guidance.
- Form 1099-DA broker reporting, live; cost-basis tracking began January 1, 2026; first full filing season Q1 2027.
Educational only, not financial, legal, or tax advice. For your situation, talk to a crypto-literate CPA. © 2026 Carter Enterprise LLC.
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