[{"data":1,"prerenderedAt":7},["ShallowReactive",2],{"faq-standard-7732":3},{"rec_id":4,"title":5,"text":6},"7732","Cryptocurrency","Where you report the income from cryptocurrency depends on how you received it.\u003Cbr>\u003Cbr>\r\n\u003Cb>Investment:\u003C/b>\r\nMenu Path: \u003Ci>Income > Common Income > Investments and Savings (1099-INT/DIV/B/DA)\u003C/i>\r\n\u003Cbr>\u003Cbr>\r\n\u003Cb>Mining:\u003C/b>\r\nMenu Path: \u003Ci>Income > Business / Rental Income > Business Income (Schedule C)\u003C/i>\r\n\u003Cbr>\u003Cbr>\r\n\u003Cb>Mining as a Hobby:\u003C/b>\r\nMenu Path: \u003Ci>Income > Uncommon Income > Other Income\u003C/i>\r\n\u003Cbr>\u003Cbr>\r\n\u003Cb>Wages:\u003C/b>\r\nMenu Path: \u003Ci>Income > Common Income > Wages (W-2)\u003C/i>\r\n\u003Cbr>\u003Cbr>\r\n\u003Cb>General Reporting:\u003C/b>\r\nMenu Path: \u003Ci>Income > Cryptocurrency\u003C/i>\r\n\u003Cbr>\r\nIf you enter a crypto sale in our software, we'll automatically indicate (on your return) that you engaged in digital asset transactions.\r\n\u003Cbr>\u003Cbr>\r\nA digital asset, also known as cryptocurrency or altcoin, is a medium of exchange that only exists digitally. It has no centralized authority but uses a decentralized system to record transactions and relies on cryptography to prevent counterfeiting and fraudulent transactions. Examples of cryptocurrencies are Bitcoin, Dogecoin, and Ethereum, just to name a few.\r\n\u003Cbr>\u003Cbr>\r\nIncome paid in cryptocurrency or earned by buying, selling, or mining cryptocurrency is subject to taxation by the IRS. You can read the direction the IRS has given on \u003Ca href=\"https://www.irs.gov/businesses/small-businesses-self-employed/digital-assets\" target=\"blank\">IRS.gov\u003Cspan class=\"append_external\" style=\"margin-right:4px;\"> \u003C/span>\u003C/a>.\r\n\u003Cbr>\u003Cbr>\r\nWhere you enter cryptocurrency income depends on how you earned the income.\r\n\u003Cbr>\u003Cbr>\r\n\u003Cb>Investment\u003C/b>\u003Cbr>\r\nIf you held cryptocurrency for investment, it should be treated as a \u003Ca href=\"/freefile2025/answers?faq=8535\">capital gain or loss\u003C/a>. \r\n\u003Cbr>\u003Cbr>\r\n\u003Cb>Mining\u003C/b>\u003Cbr>\r\nIf you mined cryptocurrency, earnings from this activity should be converted to U.S. dollars as of the date you receive it and be included as income. If you were self-employed for the cryptocurrency mining, the income needs to be reported as \u003Ca href=\"/freefile2025/answers?faq=1629\">self-employment income\u003C/a>.\r\n\u003Cbr>\u003Cbr>\r\n\u003Cb>Mining as a Hobby\u003C/b>\u003Cbr>\r\nIf you mined cryptocurrency as a hobby, earnings from this activity should be converted to U.S. dollars and entered on the \u003Ci>Other Sources of Income\u003C/i> screen as digital asset income. You can't reduce your hobby earnings by any \u003Ca href=\"/freefile2025/answers?faq=3076\">hobby expenses\u003C/a>.\r\n\u003Cbr>\u003Cbr>\r\n\u003Cb>Wages\u003C/b>\u003Cbr>\r\nWages paid in cryptocurrency should be converted to U.S. dollars on the date of each payment by your employer and reported on your \u003Ca href=\"/freefile2025/answers?faq=1816\">\u003Ci>Form W-2\u003C/i>\u003C/a>. The conversion to dollars should have already happened before you get your \u003Ci>W-2\u003C/i>.\r\n\u003Cbr>\u003Cbr>\r\n\u003Cb>Rewards\u003C/b>\u003Cbr>\r\nRewards, sometimes called airdrops, are usually reported as digital asset income on the \u003Ci>Other Sources of Income\u003C/i> screen.\r\n\u003Cbr>\u003Cbr>\r\n\u003Cb>Other Income\u003C/b>\u003Cbr>\r\nIncome paid to you in exchange for goods and services that wasn't wages (for example, you were paid for a service performed as part of your self-employed business in cryptocurrency) should be converted to U.S. dollars on the date of each payment and reported along with any other \u003Ca href=\"/freefile2025/answers?faq=1629\">self-employment income\u003C/a>.\r\n\u003Cbr>\u003Cbr>\r\nIncome that isn't self-employment income (e.g. forks or stakes) should be reported on the \u003Ci>Other Sources of Income\u003C/i> screen as digital asset income.\r\n\u003Cbr>\u003Cbr>\r\n\u003Cb>General Reporting\u003C/b>\u003Cbr>\r\nIf you received, sold, sent, exchanged, or otherwise acquired any cryptocurrency during 2025, you'll also need to report it on \u003Ci>Form 1040\u003C/i>.\r\n\u003Cbr>\u003Cbr>\r\n\u003Cb>Note\u003C/b>: The IRS has additional \u003Ca href=\"/freefile2025/answers?faq=8625\">cryptocurrency reporting requirements\u003C/a>.\r\n\u003Cbr>\u003Cbr>\r\nFor additional information see the FAQs on the \u003Ca href=\"https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions\" target=\"blank\">IRS website\u003Cspan class=\"append_external\" style=\"margin-right:4px;\"> \u003C/span>\u003C/a>.",1777391633640]