With April 15^th quickly approaching, it’s important to know about paying your cryptocurrency taxes for 2024 tax year. If you’ve traded, sold, or earned any digital assets this past year, then it’s crucial to report this activity to the IRS.

But since crypto is a relatively new form of income, many people are still confused about how it’s filed and taxed. Understanding how it’s reported is essential if you want to stay compliant and avoid potential penalties. In this guide, we’ll share everything you need to know about digital assets so you can file your cryptocurrency taxes this year.

Please note that this information is for filing taxes on cryptocurrency transactions in 2024. For crypto transactions in 2025, the IRS introduced a new way to keep track of your digital activity. You can read all about these changes and filing your 2026 taxes here.

Cryptocurrency as a Digital Asset

Because crypto can be bought, sold, and owned online, the IRS treats it as a digital asset. Non fungible tokens (NFTs), stablecoins, and other forms of digital currency are also classified as digital assets.

These digital assets are considered property, like stocks and real estate, rather than currency itself.

For this reason, crypto may be subject to capital gains or income tax, which taxpayers are required to report to the IRS.

But does your activity classify as capital gains tax, income tax, or neither? Well, this largely depends on what you did with the crypto over the past year. Understanding these different transactions is the key to filing your federal taxes correctly.

Do I Have to Pay Taxes on Cryptocurrency?

You are only required to pay taxes on your crypto if you’ve made a specific type of transaction. These types of transactions can either be taxed as 1) capital gains, or 2) income.

Capital Gains Tax

You are required to report and pay a capital gains tax if you’ve made a profit on your digital asset. So, if you’ve done any of the following in 2024, your crypto will be taxed as capital gains:

• Selling your crypto and earning more money than you paid for them
• Converting or exchanging your crypto for a new digital asset
• Spending your crypto on goods and services

Income Tax

Cryptocurrency may also be considered income, which will be added to your income tax bracket. The IRS considers the following types of transactions as taxable income:

• Getting paid in crypto
• Receiving crypto in exchange for goods and services
• Mining crypto
• Earning staking rewards
• Earning other income (ex: USD Coin) from your crypto
• Receiving crypto as an airdrop or reward

Non-Taxable Events

Not all types of crypto transactions will be taxed. For instance, you won’t be required to pay taxes if you’ve done the following in 2024:

• Bought crypto with cash and held onto it (no selling or exchanging)
• Donated crypto to a 501(c)(3) charitable organization
• Received crypto as a gift
• Gave crypto as a gift (as long as it was under $18,000 per person)
• Transferred crypto between your different personal accounts

How Much Cryptocurrency Taxes Do I Owe?

If you’ve made a capital gains or income taxable transaction, you might owe the IRS some money. While many tax software programs like H&R Block will calculate this for you, it’s still important to understand the process.

When it comes to income taxable transactions, your crypto activity will be subject to the same taxes as normal income.

But capital gains taxes are bucketed into two categories – short term capital gains or long term capital gains. Short term capital gains apply if you’ve held the crypto for less than a year. In this case, you’ll be taxed at the regular income rates. But if you’ve held it for more than a year, you’ll fall into the long term capital gains rate. This is taxed at a reduced rate (either 0%, 15%, or 20%) depending on your income level.

But what do you do if you sold the crypto for less than what you paid for it? This is what the IRS considers a capital loss. Losses may be deducted to offset your gains from other assets like stocks or bonds, which can result in a lower tax liability! However, keep in mind that the maximum you can use to offset other income per year is $3,000.

Filing Cryptocurrency Taxes for 2024 Tax Year

Now that you understand how crypto taxes work, let’s talk about how to report it on your tax form. One federal income tax returns, there’s a question that states:

At any time during the tax year, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?

If you’ve made a taxable transaction (either capital gains or income), you’ll need to answer “Yes”.

In order to correctly fill out the form, you’ll want to make sure you have records and documentation on hand. This includes activity transaction dates, purchase price, sale price, exchange fees, and other expenses.

If you’ve traded using a platform like Coinbase or Robinhood, you may receive a 1099-MISC for your earnings. These forms generally include all the information needed for your tax form, which can greatly simplify the filing process. It’s one of the many perks of using a crypto trading platform.

Understanding how the IRS and federal government treat cryptocurrency is valuable information you’ll need for tax season. Not only can it make filing taxes more bearable, but it also helps you avoid tax audits, legal issues, and penalty fines. So hopefully now, you should feel more confident paying your cryptocurrency taxes for the 2024 tax year!