You bought some crypto, it went up, you sold it, you made money. Or you traded one coin for another, or got paid in crypto for a side gig, or earned a few bucks in staking rewards. Somewhere in all of that, a tax bill was created, and the IRS has been getting much better at finding it. Crypto taxes are not complicated once you know the rules, but the rules are not what most people assume, and the mistakes are expensive.

The first thing to understand is that the IRS treats crypto as property, not currency. That means every time you sell crypto, trade it for another crypto, or spend it to buy something, that is a taxable event. You owe tax on the gain — the difference between what you paid for it and what you got for it. Here is the part…