Crypto and Stock Taxes 2026: Form 8949, 1099-DA and Traps

How stocks and crypto are taxed: 2026 capital gains rates

The IRS treats cryptocurrency as property, not currency, so crypto taxation works the same way as stock taxation: your gain equals proceeds minus cost basis. source

The long-term brackets for 2026 depend on total taxable income, including the gain itself: source

The 3.8% Net Investment Income Tax can apply on top when modified AGI exceeds $200,000 (single) or $250,000 (married filing jointly). These thresholds are not indexed for inflation, so the effective top federal rate on long-term gains is 23.8%.

Capital losses offset gains first, then up to $3,000 of ordinary income per year ($1,500 if married filing separately). Any remaining loss carries forward indefinitely. source

State tax is separate. California, for example, taxes capital gains as ordinary income, while states such as Florida and Texas have no state income tax.

When crypto becomes taxable

For crypto, a taxable event happens whenever you dispose of a coin — not only when you cash out to dollars.

Staking rewards are income at fair market value in the year you gain dominion and control over them — when you can sell or transfer them. source That value becomes the basis of the coins, and a later sale creates a separate gain or loss.

Mining or staking as a hobby or investment goes on Schedule 1 as other income. If it is a trade or business, it goes on Schedule C and self-employment tax of 15.3% applies.

Form 1040 asks whether you received digital assets as a reward or payment, or sold, exchanged or otherwise disposed of them during the year. If you only bought and held crypto, or moved it between your own wallets, the answer is usually “No.” Any sale, swap or staking reward means “Yes.” source

You did not sell, but you owe tax: forced buyouts and other events

The most unpleasant surprises are events that happen without your decision. Brokers report them on Form 1099-B as sales, and the tax is due for that year.

Cash-out mergers and squeeze-outs

When a company is acquired for cash, or minority shareholders are squeezed out after a tender offer, your shares are treated as sold on the closing date — whether or not you wanted to sell. If you receive acquirer stock instead, the deal may be partly or fully tax-deferred, but any cash you receive (boot) is taxable.

The issuer explains how the transaction affects your basis on Form 8937, usually posted in the investor relations section of its website. source

Company buybacks and tender offers

Selling public-company shares into a tender offer is normally taxed as a sale. In a closely held company — a family business or a startup — a redemption of an owner’s shares may instead be treated as a dividend, depending on how much your ownership drops after counting shares held by family members. Check this before the deal closes.

The 1% excise tax on stock buybacks is paid by the corporation, not by shareholders.

Reverse splits, spin-offs and delistings

• Cash in lieu of fractional shares after a reverse split is a small sale and appears on Form 1099-B.
• Spin-offs require splitting basis between the old and new shares using the percentages on Form 8937. Brokers sometimes get this wrong.
• A delisting by itself creates neither tax nor a deductible loss: you still own the shares.

Margin calls, liquidations and options

• Margin calls: when the broker sells your securities to cover a loan, it is an ordinary taxable sale.
• Crypto exchange liquidations of futures or perpetual positions realize a gain or loss. The tax character of offshore derivatives is not always clear.
• Assigned covered calls: the stock is sold at the strike price and the premium is added to proceeds. With low-basis stock, that can mean a large, unplanned gain.

Fund distributions and RSUs

Mutual funds and some ETFs distribute capital gains at year-end. These are taxable even if you sold nothing and the money was reinvested; the amount appears on Form 1099-DIV and goes on line 13 of Schedule D. source

When RSUs vest, part of the shares is usually sold to cover taxes (sell-to-cover). The vesting itself is W-2 wages; the sale is a separate line on Form 8949. A common basis error on these sales is covered in the cost basis section.

Form 8949 and Schedule D: reporting stock and crypto sales

Every sale of stock or crypto goes on Form 8949. Totals flow to Schedule D, and the result goes to line 7 of Form 1040. Brokers send you 1099-series forms — and the IRS receives copies.

A reporting threshold does not make income tax-free. If no 1099-MISC arrives because your staking income was below the threshold, you still report it.

Form 8949: which box to check

Each page of Form 8949 covers one category of transactions. Starting with 2025, digital assets have their own boxes, G through L, separate from securities. source

If the broker reported basis to the IRS and no adjustments are needed, you can enter totals directly on Schedule D lines 1a and 8a without Form 8949. source

Box B and code B are different things

Box B at the top of the page is a category: Form 1099-B with basis not reported to the IRS. Code B in column (f) means the basis shown on the form is wrong. They are handled differently:

• Basis reported to the IRS but incorrect (boxes A, D, G, J): enter the basis shown on the form in column (e), code B in column (f), and the correction in column (g). source
• Basis not reported or missing (boxes B, E, H, K): enter the correct basis directly in column (e) and 0 in column (g), unless another adjustment applies.
• Code W marks a loss disallowed under the wash sale rule; the amount goes in column (g) as a positive number.

Cost basis: why your broker form may be wrong

Cost basis is the single biggest source of errors on investment tax returns. If the broker’s form shows a blank or zero basis and you copy it as is, tax is calculated on the entire proceeds.

Form 1099-DA: proceeds yes, basis often no

Form 1099-DA reports gross proceeds from digital asset sales starting January 1, 2025, but basis only for coins acquired on or after January 1, 2026 and held at the same broker. source Anything bought earlier, or transferred in from another exchange or a self-custody wallet, will arrive without basis.

Rebuild your cost basis from your own records — exchange statements, transaction histories, crypto tax software reports. A missing transaction or wrong basis can lead to overpaid tax or an IRS inquiry.

Since 2025, crypto basis is tracked separately for each wallet or account rather than as one pool. If you do not identify specific lots, FIFO applies within each wallet — the earliest purchases are treated as sold first. source

RSUs: double taxation from a zero basis

ESPP has a similar trap: in a disqualifying disposition the discount is already in your W-2 as wages, but the broker’s basis often leaves it out. Exercising ISOs without selling can trigger the alternative minimum tax; the 2026 AMT exemption is $90,100 for single filers and $140,200 for married couples filing jointly. source

Common crypto and stock tax mistakes

Most problems with crypto and stock taxes come not from complex schemes but from ordinary oversights.

1. Copying 1099-B or 1099-DA without checking basis. A zero basis on RSUs or transferred crypto turns all proceeds into gain.
2. “I never cashed out, so there is no tax.” Every crypto swap is a taxable event.
3. Answering “No” to the digital asset question on Form 1040 while holding a 1099-DA or staking income.
4. Wash sales through an IRA. Selling stock at a loss and buying the same or substantially identical securities within 30 days before or after disallows the loss. If the repurchase happens in an IRA or Roth IRA, the loss is lost permanently. source
5. Wash sales across brokers. A broker only sees repurchases in its own account; matching across accounts is your responsibility.
6. A large gain with no estimated payments. A forced buyout or a big sale without estimated tax can lead to an underpayment penalty.
7. Writing off a crashed token without selling it. In the IRS’s view, a token that still trades is not wholly worthless, and abandonment requires an affirmative act. The usual way to lock in the loss is to sell it to an unrelated buyer. source
8. Unreported foreign accounts and funds: foreign brokerage accounts without FBAR and Form 8938, foreign funds without Form 8621.
9. Claiming a loss on frozen foreign securities in the wrong year — or never claiming it.
10. Trusting fake IRS notices. Scammers send crypto “compliance” letters linking to fake portals. Real IRS letters arrive by mail and can be verified through irs.gov.

For crypto, the wash sale rule currently applies only to tokenized securities, not to ordinary cryptocurrency. source Congress is considering bills that would change this, but as of October 8, 2026 none has been enacted. If one passes, the “sell and immediately buy back” approach for crypto may stop working.

Foreign accounts, foreign funds and frozen securities

Investors with foreign accounts or foreign funds face extra reporting — and some of the steepest penalties in the tax code.

FBAR and Form 8938

If your foreign financial accounts together exceeded $10,000 at any point during the year, you must file an FBAR (FinCEN Form 114) by April 15, with an automatic extension to October 15. source Under FinCEN’s current position, a foreign exchange account holding only cryptocurrency is not reportable on the FBAR, but one that also holds fiat currency is.

Form 8938 is filed with your return if your specified foreign financial assets exceed $50,000 at year-end or $75,000 at any time for a single US resident ($100,000 and $150,000 for married couples filing jointly). source

PFIC: foreign mutual funds and ETFs

Non-US mutual funds and ETFs — European UCITS funds, for example — are almost always passive foreign investment companies (PFICs). By default, gains are taxed at the highest ordinary rate plus an interest charge, and capital gains rates are lost. Each fund generally requires Form 8621 every year. source QEF or mark-to-market elections work best when made early.

Frozen and sanctioned foreign securities

Some investors hold securities that can no longer be traded — for example, Russian depositary receipts whose programs were terminated in 2022, with many shares frozen at depositories. The IRS has issued no specific guidance on such assets.

A loss on a worthless security is claimed in the year it becomes wholly worthless, and the taxpayer must prove that year. Formal abandonment is an alternative. Because the refund claim period for worthless securities is extended to seven years, earlier years can often still be revisited. Choosing the year and the method is a judgment call based on your documents.

How to legally reduce capital gains tax

Legal tax planning for stocks and crypto works best before December 31, not in April.

• Hold for more than a year before selling — the gap between up to 37% and 15–20% is significant.
• Use the 0% bracket. In a low-income year, long-term gains within the threshold ($49,450 single, $98,900 married filing jointly in 2026) are free of federal tax. source
• Harvest losses to offset gains. For stocks, respect the wash sale rule; for ordinary crypto it does not currently apply.
• Choose specific lots with the highest basis instead of default FIFO, and tell your broker before the sale.
• Give or donate appreciated assets. Donating stock or crypto held more than a year generally lets you deduct fair market value without paying capital gains tax. Crypto worth more than $5,000 needs a qualified appraisal.
• Startup stock (QSBS). For qualified small business stock issued after July 4, 2025, the 2025 tax law allows a partial gain exclusion after as little as three years.
• Pay estimated tax after a large sale. You generally avoid a penalty by paying 100% of last year’s tax (110% if AGI exceeded $150,000) or 90% of this year’s tax.

When professional help pays off

A do-it-yourself return works when you have one broker and complete forms. Professional help is usually worth it if you:

• received an IRS notice (CP2000, Letter 6173) about crypto or stock sales;
• have RSUs, ESPP or stock options and a 1099-B with zero basis;
• have a 1099-DA without basis or transfers between exchanges and wallets;
• hold foreign brokerage accounts, foreign funds or frozen foreign securities;
• expect a merger, buyout, IPO or another large transaction;
• want to harvest losses and plan gains before the end of 2026.

What to do if you get an IRS letter or find an error

If you find an error on a past return or receive an IRS letter, act calmly but quickly.

• CP2000 is an IRS proposal to adjust your tax based on 1099 data. It is not a final decision: by the deadline in the letter, you can agree or respond with a corrected Form 8949 and basis documentation.
• Letter 6173 requires a response about digital asset transactions; Letters 6174 and 6174-A are informational, but should not be ignored.
• An amended return (Form 1040-X) is the route when you find the error yourself, before any letter arrives.
• Unfiled FBARs and foreign forms are fixed through specific IRS procedures. Which one fits depends on whether the failure was non-willful, and that choice is made before filing, not after.
• Losses from investment scams involving crypto, where you invested with a profit motive, may in some cases be deductible as a theft loss — limited to your basis, in the year the theft is discovered. source

What to gather before a consultation: all 1099-B, 1099-DA, 1099-DIV and 1099-MISC forms for the year; transaction exports from every exchange and wallet; RSU vesting and ESPP purchase records; Form 8937 for any corporate actions; foreign account statements; and any IRS letters.

Crypto and stock tax FAQ

How is cryptocurrency taxed in the US in 2026?

Cryptocurrency is taxed as property. Gains on coins held one year or less are taxed at ordinary rates from 10% to 37%. Gains on coins held more than one year are taxed at 0%, 15% or 20%; in 2026 the 0% rate applies to taxable income up to $49,450 for single filers and $98,900 for married couples filing jointly. Staking and mining rewards are taxed as ordinary income when received.

Is swapping one crypto for another taxable?

Yes. Exchanging one cryptocurrency for another, including stablecoins, is treated as selling the first coin at fair market value. The gain or loss must be reported on Form 8949 even if no dollars were withdrawn to a bank account.

How do I report crypto and stock sales on Form 8949 and Schedule D?

Each sale of stock or crypto goes on Form 8949 under the box that matches your broker form: A–F for securities reported on Form 1099-B, G–L for digital assets reported on Form 1099-DA. Short-term and long-term totals flow to Schedule D, and the result goes to line 7 of Form 1040. If the broker reported basis to the IRS and no adjustments are needed, totals can go directly on Schedule D lines 1a and 8a.

Is a cash buyout in a merger taxable?

Yes. When a company is acquired for cash or minority shareholders are squeezed out, your shares are treated as sold on the closing date and the gain is taxable that year. If you receive acquirer stock, the tax may be deferred, but any cash received is taxable. The issuer explains the basis effect on Form 8937.

Why does my 1099-B show zero basis for RSU shares?

Brokers often leave out the value of RSU shares at vesting, even though that value was already taxed as wages on your W-2. Reporting the form without correction taxes the same income twice. The correct basis is the fair market value at vesting, and it is corrected on Form 8949 using the broker’s supplemental information.

Does the wash sale rule apply to crypto?

As of October 8, 2026, the wash sale rule applies to stocks and securities, including tokenized securities, but not to ordinary cryptocurrency. Congress is considering bills that could change this, but none has been enacted.

Do I need to report a foreign brokerage account?

Yes, if your foreign financial accounts together exceeded $10,000 at any time during the year, you must file an FBAR. Above separate, higher thresholds, Form 8938 must also be filed with your tax return. Foreign mutual funds and ETFs usually require Form 8621 as well.