How do I file my taxes for cryptocurrency?

The following information is for educational purposes only and does not constitute an endorsement of cryptocurrency. Visit Discover Crypto for more information.

Information provided by PayPal is not intended to be and should not be construed as tax advice. For questions about your specific tax situation, please consult a tax professional.

Here is a list of some of the documents you may need when preparing your annual tax returns for cryptocurrency with the IRS:

IRS Form 1099-DA

• Beginning with tax year 2025, PayPal is required to report proceeds from digital asset dispositions to the IRS and to the recipient of such proceeds on a Form 1099-DA. This form reports transactions like the sale or exchange of a digital asset like cryptocurrency or PYUSD. You may be required to recognize gains from these dispositions of digital assets.
• If you engaged in a disposition like a sale or exchange of cryptocurrency in your PayPal wallet during the applicable tax year, PayPal will send you this Form 1099-DA by February 15. 

IRS Form 1099-MISC (For cryptocurrency)

• For US taxpayers, the IRS requires companies that make certain types of miscellaneous income payments to provide the recipient of such payments and the IRS with a 1099-MISC. This form provides information for a wide range of income payments, such as referral bonuses, prizes and awards, and other income. For tax year 2025, if you’ve earned $600 or more this year in crypto bonuses, prizes, or awards, the 1099-MISC for crypto will be made available by the platform that issued the payments during the taxable year. For tax year 2026, the $600 threshold will be increased to $2000 and then adjusted for inflation starting in 2027.
• Not all rewards points are considered reportable. PayPal will only issue a 1099-MISC if you redeem the yearly threshold amount of specifically reportable rewards.
• If you accept miscellaneous income payments in fiat currency, as opposed to cryptocurrency, you may receive a separate 1099-MISC for those transactions. Fiat is a government-issued currency like the U.S. dollar that is backed by the government that issues it.
• PayPal will only send you these forms by January 31 if they apply to the preceding year's payments.

IRS Form 1099-K (For cryptocurrency)

• PayPal is required to provide information to the IRS about US taxpayers who receive payments in cryptocurrency (including PYUSD) for the sale of goods and services above the reporting threshold in a calendar year. If you received payments in cryptocurrency for goods or services transactions over the annual threshold, PayPal will send you this form 1099-K by January 31, applying to the preceding year’s payments. 
• If you accept payment for goods and services in fiat currency, as opposed to cryptocurrency, and meet the reporting threshold, you’ll receive a separate 1099-K reporting for those transactions. Fiat is a government-issued currency like the U.S. dollar that is backed by the government that issues it.

Visit Will PayPal Report My Sales to the IRS? for more information. 

IRS Form 8949

• When you sell or engage in other dispositions of cryptocurrency, the IRS requires the details of the transaction to be reported on Form 8949, “Sales and Other Dispositions of Capital Assets”. Taxpayers are required to prepare and submit Form 8949; PayPal will not provide this.

Year-End Gain/Loss Statement and Transactions Summary

• PayPal will provide you with supplemental materials, including a transactions summary and a year-end gain/loss statement. The Transaction Summary lists each crypto transaction you engaged in throughout the year. The Gain/Loss Statement includes your cost basis, when available, for the assets you bought and sold on the platform. This statement contains information that is typically provided on Form 8949. The information provided by PayPal is not intended to be and should not be construed as tax advice.
• PayPal calculates the cost basis (based on the Highest-In/First-Out cost basis method) and corresponding gains or losses on every transaction, when available. You should consult your tax advisor regarding which cost-basis method is appropriate for your specific situation.