If you traded, sold, swapped, staked, mined, or moved crypto in 2025, now is the time to get organized. The 2025 federal individual return is generally due April 15, 2026. This year, crypto taxpayers have an extra complication: broker reporting on Form 1099-DA started for 2025 sales. However, reporting basis is generally still optional for 2025. Many taxpayers will still need to rely on their own records.
That combination creates a dangerous trap. Many people will receive partial reporting from exchanges, assume the IRS got the full story, and file a return that is incomplete or internally inconsistent. To avoid this, before you file, work through this checklist to ensure thoroughness.
1. Answer the digital asset question correctly
On Form 1040, you must answer the digital asset question “Yes” or “No.” For 2025, check “Yes” if you received crypto as payment, reward, or award. Also check “Yes” if you sold, exchanged, or otherwise disposed of a digital asset. You do not check “Yes” just because you held crypto, moved it between your wallets, or bought crypto with U.S. dollars.
This question is easy to overlook because it sits near the top of the return, but it is one of the IRS’s clearest signals of crypto compliance.
2. Gather every exchange, wallet, and on-chain activity source
Do not rely on one exchange CSV and call it done. Pull records from:
- Centralized exchanges
- Self-custody wallets
- DeFi protocols
- Staking platforms
- Any app that lets you buy, sell, swap, bridge, or spend crypto
The IRS expects taxpayers to keep sufficient records to establish the positions taken on the return, including dates, units, fair market value in U.S. dollars, and basis.
Make sure you have complete, accurate data collected before you start preparing your return. Your tax filing will only be as reliable as your data.
3. Reconcile transfers before you calculate gains
A transfer between wallets or accounts you own is generally not a taxable event. But if your software cannot match the outgoing transfer to the incoming transfer, it may incorrectly treat the movement as a sale, a disposal with no basis, or even taxable income.
This is one of the most common last-minute errors I see. Before filing, review large withdrawals and deposits and ensure they are classified as transfers where appropriate.
4. Do not trust Form 1099-DA to do the whole job
Starting January 1, 2025, brokers may issue Form 1099-DA for digital asset sales and exchanges. But for 2025, brokers usually do not have to report basis information. Some may do so voluntarily. Basis reporting becomes much more important in 2026 and beyond.
That means a 1099-DA may report the proceeds to the IRS without fully disclosing your cost basis. If you file using only the gross numbers from the form, you could easily overstate gain.
5. Review ordinary income items separately from capital gains
Separate your crypto tax activities into capital transactions (reported on Form 8949) and ordinary income items. Check each type carefully before filing.
For many taxpayers, crypto activity falls into two buckets:
Capital transactions:
- Sales
- Swaps
- Spending crypto
- Certain other dispositions
Ordinary income items:
- Staking rewards
- Mining income
- Compensation paid in crypto
- Certain airdrops or rewards, depending on facts
The IRS directs taxpayers to use Form 8949 and Schedule D for capital dispositions. Ordinary income items may go on Form 1040, Schedule 1, or a business schedule, depending on the activity.
Keep these categories clearly separated as you review your reports, since many crypto tax reports mix these in ways that are difficult to review.
6. Briefly: understand the new wallet-by-wallet basis rules
This is the biggest technical issue to at least mention in the 2025 return season.
Under final digital asset reporting regulations, taxpayers are transitioning away from older universal or multi-wallet basis approaches and into a wallet-by-wallet or account-by-account framework for digital assets beginning January 1, 2025. IRS Revenue Procedure 2024-28 created a safe harbor that allows taxpayers to allocate pre-2025 “unused basis” to wallets or accounts as of January 1, 2025, provided they meet the recordkeeping and allocation requirements.
In simple terms, most crypto users and software used to track basis globally. Now, you must track basis for each wallet or account. This is a big bookkeeping change if you use multiple exchanges and self-custody wallets, even for simple returns.
For each type of digital asset, the safe-harbor allocation must be completed by the date of the first sale of that asset type on or after January 1, 2025, and the allocation is irrevocable.
Before using your software’s historical basis method, review that it aligns with the 2025 wallet-by-wallet rules. Do not rely on past methods without checking for compliance with new requirements.
7. Look for missing basis before filing
If your tax report shows proceeds with zero basis, missing basis, or unexpected short-term gains that do not make economic sense, stop and investigate. For 2025, your books and records may still be doing more of the work than broker reporting.
Common reasons basis goes missing:
- Transfers were not matched
- Wallet imports were incomplete
- The beginning inventory was wrong
- DeFi transactions were misclassified
- Pre-2025 basis was not properly mapped under the new wallet-by-wallet framework
8. Check whether an extension makes more sense than a rushed, bad return
An extension gives you more time to file, not more time to pay. But for crypto taxpayers with incomplete records, a properly handled extension is often better than filing an obviously wrong return and then amending later.
That is especially true if your activity includes:
- Multiple wallets
- DeFi
- Bridging
- NFTs
- Frequent transfers
- Missing basis
- 1099-DA forms that do not match your records
A rushed crypto return can be more expensive than a delayed but accurate one.
9. Make sure the final numbers land on the right forms
Before filing, confirm that:
- Capital gains and losses are on Form 8949 and Schedule D
- Ordinary crypto income is reported in the proper income section
- The digital asset question is answered
- 1099-DA information is reconciled, not blindly copied
- Your gain/loss report matches your source records
This is not glamorous, but this is where many avoidable notices start.
10. Keep a permanent crypto tax file
After filing, save:
- CSVs and transaction exports
- Wallet addresses used
- Gain/loss reports
- Income reports
- PDFs of 1099-DA and other tax forms
- Notes explaining unusual transactions
- A record of your basis methodology
The wallet-by-wallet regime makes future-year consistency more important, not less. Good records this year can save enormous cleanup costs next year.
Final thought
The biggest mistake in crypto tax is not always underreporting. Often, it is filing a return that looks complete because a form arrived in the mail, when in reality, the hard part, basis, transfers, and classification, was never fully reconciled.
For 2025 returns, that risk is even higher. Form 1099-DA is now in the picture, but full basis reporting is not yet generally required for 2025, and the move toward wallet-by-wallet accounting means historical shortcuts may no longer hold up.
If you traded only on one exchange, filing may be straightforward. If you used multiple wallets, transferred assets, or used DeFi, slow down to review all data and form placements to ensure accuracy. Check each area in this checklist.
