Invest in crypto? Here’s what to know about your 2025 taxes

By Jeanne Sahadi, CNN

(CNN) — When it comes to voluntarily paying taxes on time to the IRS, crypto investors may not have a great record. At least, not according to an IRS review from 2023, which showed “the potential for” a mere 25% compliance rate.

Translation: Only about a quarter of crypto investors are likely voluntarily complying with their tax obligations.

But that low rate is likely to rise, because 2025 is the first year that investors with accounts on centralized crypto exchanges are subject to third-party reporting.

If you sold or exchanged crypto this year and conducted those transactions on a centralized exchange such as Coinbase, the exchange is now required to report your sales and exchanges to the IRS on Form 1099-DA (Digital Assets). You’ll get a copy too, and it should be sent to you by January 30, 2026 in time for you to file your 2025 tax return.

To be clear, that reporting does not create any new tax obligations for you. But it will make it easier for the IRS to know if you’re shirking them.

How? If what you report on your return doesn’t match what appears on the 1099-DA form sent to the IRS, its Automated Underreporter system may flag the discrepancy and send you a notice to correct the mismatch, said Shehan Chandrasekera, head of tax strategy at CoinTracker, a provider of crypto tracking technology.

But there is something in it for you, too.

“The 1099, while it increases compliance, also makes life a lot easier for those who need to report on their investments,” said Tomer Siegal, vice president of product at Ledgible, a crypto tax software provider.

What will not be on your 1099-DA

There are, however, some important exceptions of certain crypto transactions that do not have to be reported on the 1099-DA, but which you will still need to report on your 2025 tax return next year.

Cost basis: For 2025, centralized exchanges are only required to report the gross proceeds of your crypto sales on the 1099-DA, not the cost basis, Chandrasekera said.

The cost basis is what you will need to calculate to determine what your capital gains and losses are.

Starting in 2026, however, exchanges will have to start reporting cost basis. But only for securities purchased on or after January 1, 2025 and only if the purchase and subsequent sale took place on the same exchange, and the asset was held by the exchange the whole time, Siegal said. “No transfers can occur.”

If you do get a 1099-DA with gross proceeds, given that it’s the inaugural year of the reporting requirement, “check that (your crypto exchange) reported it correctly,” Siegal said.

Stablecoin, NFTs and wrapped tokens: Centralized exchanges issuing 1099-DAs do not have to report any qualified stablecoin sales you made under $10,000, nor any sale of non-fungible tokens (NFTs) below $600, nor transactions involving the transfers of wrapped tokens (which allow for easy use of one form of crypto — eg, bitcoin — on a decentralized platform that is based on another form — eg, Ethereum), Chandrasekera said.

You, however, are still obligated to report them on your tax return.

Crypto ETFs: Siegal noted that if you sold shares in an SEC-regulated bitcoin or ethereum exchange-traded fund this year, those transactions will be subject to third-party reporting. But they will appear on a Form 1099-B – the same form used for any of your sales through a broker involving stocks, bonds or derivatives.

Crypto assets on defi exchanges are not subject to third-party reporting

If you engaged in transactions this year over decentralized exchanges – which allow for peer-to-peer trading of crypto and you, not the platform itself, maintains possession of your holdings – you will not get a 1099-DA from those platforms. What’s more, a requirement that they begin issuing those forms in 2027 was repealed earlier this year.

Nevertheless, you are still obligated to report your taxable defi transactions on your tax return.

Mind your gains and losses

Despite the different reporting requirements for your SEC-regulated assets like stocks versus assets on a crypto exchange, the tax treatment of your capital gains and losses are the same.

Namely, that your losses can offset your gains. And if you have more losses than gains, you also may use them as a deduction for up to $3,000 of your ordinary income in any given tax year. Any losses in excess of all that may be carried forward to apply to gains in future tax years.

So, as an oversimplified example: If in 2025 you realized $15,000 in capital losses (meaning you sold your assets for less than you bought them) and you had $8,000 in gains, you can use $8,000 of your losses to cancel out any tax you owe on your gains plus you may use another $3,000 of your losses as a deduction on your 2025 ordinary income (eg, salary and bank interest). Plus, you still will have $4,000 in losses that may be used in future tax years.

It’s important to know, too, that you can use your losses in one asset class (eg, stocks) to offset your gains in another (eg, crypto), Chandrasekera said.

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