Do I need to report cryptocurrency on my taxes?

Yes, cryptocurrency is treated as property by the IRS, and all transactions are potentially taxable. Taxable events include: selling crypto for cash, trading one cryptocurrency for another, using crypto to purchase goods or services, receiving crypto as payment for work (taxed as ordinary income), mining crypto (taxed as ordinary income at fair market value when received), and receiving airdrops or hard fork tokens (taxed as ordinary income). Non-taxable events include: buying crypto with cash and holding it, transferring crypto between your own wallets, and gifting crypto (though gift tax rules may apply for large amounts). The IRS has been increasingly aggressive about crypto enforcement: Form 1040 now asks directly if you dealt in cryptocurrency, the IRS sends letters (CP2000) to taxpayers who received 1099s from exchanges but didn't report, and starting in 2025, exchanges must report transactions on Form 1099-DA. If you haven't been reporting crypto transactions, you should amend prior returns or file delinquent returns before the IRS contacts you. The penalties for not reporting crypto income are the same as any other unreported income: accuracy penalties, failure-to-file penalties, and potentially fraud penalties.