A Taxpayer's Guide to Reporting Sales of Cryptocurrencies and Securities

This is a step-by-step guide to reporting stock and crypto sales on your U.S. tax return, when and how you must use Form 8949, and special reporting considerations for crypto on a U.S. tax return.

Who Must Report?

You must report stock and crypto sales on your U.S. tax return if:

• You're a U.S. citizen or resident alien for tax purposes
• Earn income from sources in U.S. or trade from U.S.-based platforms
• You Have a U.S Green Card
• You are a nonresident alien but are taxed in the United States on certain categories of income

Taxable Events: What Counts?

Both stocks and cryptocurrencies can trigger taxable events. This is what the IRS tracks:

Crypto:

• Converting crypto to fiat (e.g., USD, EUR)
• Trading one crypto for another (e.g., ETH for BTC)
• Using cryptocurrencies to buy goods or services
• Receiving cryptocurrencies from mining, staking, or airdrops (revenue)

Stocks:

• Selling shares for a gain or loss
• Exercising options or restricted stock units (RSUs)
• Receiving dividends (income)
• Short- or long-term capital gains/losses depending on holding period

Keeping assets you do not sell is not taxed. Taxation arises only upon a sale or exchange.

IRS Forms to Know

What you'll need to file:

✅ Form 8949 – Sales and Other Dispositions of Capital Assets

Use Form 8949 to list each of your individual transactions in a capital asset (stocks or crypto). You’ll report:

• Date acquired
• Date sold
• Sale price
• Original amount paid (cost basis)
• Gain or loss

You’ll sort transactions into short-term (held ≤ 1 year) and long-term (held > 1 year).Use Form 8949 even if you have dozens or hundreds of trades—although most tax programs accommodate CSV imports from exchanges or brokerages to simplify the process.

✅ Schedule D – Capital Gains and Losses

You report Form 8949 entries on Schedule D after you total entries on that schedule. It flows to your Form 1040, the usual personal U.S. income tax return form.

✅ Form 1099-B or 1099-K (if issued)

Brokers normally issue Form 1099-B for stock sales. Cryptocurrency exchanges may issue Form 1099-K or 1099-DA (from 2025 onwards) if you exceed certain thresholds. These are not necessarily complete or accurate—so verify them with your own documentation.

Reporting Crypto on U.S. Tax Return: Special Rules

The IRS treats cryptocurrency as property, not money. That distinction creates unique tax reporting challenges for U.S. taxpayers. If you’re reporting crypto on US tax, here are the key rules you need to know:

1. Document Crypto-to-Crypto Transactions

Swapping Bitcoin for Ethereum? It’s a taxable event. When reporting crypto on your US tax, you must disclose both:

• The cost basis of the crypto you gave up
• The fair market value of the crypto you received

2. Fair Market Value Matters

Buying goods or services with crypto is also taxable. For example, if you purchase a laptop with Bitcoin, you’ll need to calculate and report any gain or loss based on its fair market value at the time of purchase. This rule is central when reporting crypto on US tax returns.

3. Income vs. Capital Gains

Not all crypto transactions are treated the same:

• Mining, staking, or airdrops = ordinary income (reported on Schedule 1 or Schedule C depending on hobby vs. business).
• Selling or trading crypto = capital gains (short- or long-term, depending on holding period).

Understanding these differences is essential for correctly reporting crypto on US tax.

4. Track Your Cost Basis Carefully

Most platforms don’t track cost basis across exchanges or wallets. If you use multiple platforms, keep detailed records with a crypto tax tracker or spreadsheet. Good record-keeping makes reporting crypto on US tax far less stressful.

Stock Transactions: Ubiquitous but Complex

More standardized reporting of stock sales, but traps remain:

• Be cautious of wash sales—trading a stock for a loss and immediately buying it back in a 30-day window. The IRS won't permit you to deduct the loss.
• If you trade frequently or use options, make sure your records match your brokerage’s Form 1099-B.
• Foreign investors in American stocks should be conversant with withholding tax provisions and possible treaty benefits.

What If I Don't Report?

IRS gets tougher on crypto and stock reporting. Here's what you risk:

• Penalties for unpaid taxes and interest
• Large or frequent transaction flags for audit
• Fraud charges in extreme cases

Even for trades that result in losses, you must report them—this can be used to offset capital losses and reduce your tax burden.

FAQs

Do I need to report crypto that I didn't cash out to fiat? Indeed. The purchase of one crypto with other crypto, or its usage, still constitutes a sale.

What would happen if I traded small? All sales—regardless of amount—must be reported. There's no minimum threshold.

Are losses from stocks or cryptocurrencies deductible? Yes. Net capital losses in an amount up to $3,000 can be offset with ordinary income each year. Losses over that amount carry over to future years.

What about if I'm using several exchanges and wallets? You are responsible for pulling together all activity across all platforms. Simplify that with crypto tax software.

Do foreign citizens need to disclose crypto or U.S. stocks? If you are an American taxpayer (citizen, resident, or Green Card holder), yes. Even foreign investors in American stocks can owe American taxes on dividends or profits.

What is the crypto reporting deadline? Same date as your usual tax return—April 15 (October 15 with extension).

Does the IRS really track crypto? Yes. The IRS is making use of blockchain analysis and requires exchanges to generate tax forms. It is presently pursuing unreported crypto income.

Final Tips

• Keep precise accounts of every purchase, sale, transfer, and receipt
• Use a reputable tax software or a tax pro—especially for crypto
• Do not overlook small payments; they sum up
• Use Form 8949 correctly for both stock and crypto sales
• Report honestly, no matter losses you faced

It's challenging American tax law for crypto and stock trading, but it can be managed. If you report everything and are organized, you’ll be good and potentially even save yourself from owing taxes. Whether you invest part-time or trade regularly, it's necessary to bring tax reporting into your routine.