Form 8949 is where you report crypto sales and gains generated. The tax rate depends on the state you live in, how long you held the asset, and your tax bracket. Tax-free cryptocurrency transactions Here are 2 sources for official IRS guidance on virtual currencies:
Crypto exchanges, Singh explains, will send the new form, 1099-DA, directly to the IRS—and a copy to the taxpayer—so filers won't have to submit it. But taxpayers will still need to use the information from their 1099-DA to complete forms 8949 and 1040. Do you have to pay taxes on cryptocurrencies? If you’ve bought the same cryptocurrency at multiple price points, you may have trouble determining your cost basis. If you find yourself in this situation, you’ll need to use a cost basis method like FIFO, LIFO, or HIFO. These cost basis methods determine the ‘order’ in which your cryptocurrency gets disposed of.