How to report crypto on taxes

"Everything goes back to the dollar value, and that's what the IRS really cares about," Yang said. "Whenever you buy the NFT, you have to convert it back to dollars — you have to figure out what you gained on the purchase, and then you can report your taxes that way. And it works the same way when you sell it, too," he said. How To Report Cryptocurrency On Your Taxes If you bought a car with Bitcoin, if you realized heavy losses with dogecoin, if you did a job for someone and got paid in Ethereum—these are all examples of reportable, taxable events. If you have not reported these transactions, consider that the IRS typically raises audit flags around two years after a tax return is filed. To avoid penalties, interest, and possible fraud charges, you should amend your previous tax returns so that your virtual currency transactions are accounted for.

If you simply bought crypto with fiat currency and took no later action upon it (other than moving it to another crypto wallet), then you can safely choose “no.” If you did anything else—including buying NFT or a product online, staking your crypto, or converting it back into cash—then you should choose “yes.” Tax Implications of Swaps Normally, a taxpayer who merely owned digital assets during 2022 can check the "No" box as long as they did not engage in any transactions involving digital assets during the year. They can also check the "No" box if their activities were limited to one or more of the following: