Crypto, NFTs, and Taxes: What You Need to Know for the 2025 Tax Year
As tax season approaches, many taxpayers are starting to receive their 2025 tax documents, including W-2s and various Forms 1099. If you bought, sold, or otherwise disposed of digital assets during the year, there are a few important IRS reminders you should be aware of before filing your return.
Digital asset reporting is an area the IRS continues to focus on, and misunderstanding the rules can lead to mistakes, delays, or unexpected tax issues.
What Counts as a Digital Asset?
The IRS uses the term digital assets broadly. Common examples include:
- Cryptocurrencies such as Bitcoin and Ethereum
- Stablecoins
- Nonfungible tokens (NFTs)
- Other virtual currencies or blockchain-based assets
If you sold, exchanged, or disposed of any of these assets during 2025, there may be tax reporting requirements—even if you didn’t receive a tax form.
The New Form 1099-DA
Taxpayers who used a broker to sell or dispose of digital assets may receive a Form 1099-DA. Brokers are required to send a copy of this form to both the taxpayer and the IRS by February 17, 2026.
It’s important to understand what this form does—and does not—include:
- It reports the gross proceeds of certain digital asset transactions
- In many cases, it does not include cost basis
- Taxpayers are often responsible for calculating gain or loss themselves
Because of this, the information on a 1099-DA may not be enough on its own to correctly prepare your tax return.
You Must Report Digital Asset Activity—With or Without a 1099
A common misconception is that digital assets only need to be reported if a tax form is received. That is not the case.
The IRS requires taxpayers to report all taxable income, gains, or losses related to digital assets, regardless of whether a Form 1099-DA was issued. This includes transactions conducted on platforms that may not issue reporting forms.
Keeping good records of purchases, sales, transfers, and transaction dates is critical for accurate reporting.
The Digital Asset Question on Your Tax Return
When filing your federal tax return, you will be required to answer a “yes” or “no” question about digital asset activity.
Every taxpayer must answer this question—even if they did not own digital assets.
The IRS provides a questionnaire to help determine how to answer accurately. Answering incorrectly, even unintentionally, can create issues later if the IRS reviews your return.
Why This Matters
Digital asset reporting is an area of increased IRS enforcement and data matching. Errors commonly occur due to:
- Missing cost basis information
- Incomplete transaction history
- Assuming small or infrequent transactions don’t matter
- Answering the digital asset question incorrectly
Taking the time to properly report digital asset activity can help avoid notices, audits, or penalties down the road.
Final Thoughts
If you were involved with crypto, NFTs, or other digital assets in 2025, it’s important to understand your reporting obligations before filing your return. Even simple transactions can have tax consequences, and the rules continue to evolve.
If you’re unsure how your digital asset activity should be reported, speaking with a qualified tax professional can help ensure everything is handled correctly the first time.
