Crypto Proceeds vs Income Tax Treatment Guide (2026)
Distinguish crypto capital proceeds from ordinary income: sales treatment, mining/staking income, wages classification, and mixed transaction reporting.
Summary
Crypto transactions can be capital gains or ordinary income. This guide explains classification, reporting differences, and mixed transaction treatment.
Key Steps
- 1Classify sales: crypto sold for fiat generates capital gain/loss on Form 8949.
- 2Report mining income: ordinary income at FMV when mined, Schedule 1.
- 3Track staking rewards: ordinary income at FMV when received.
- 4Document wages: crypto salary treated as ordinary income, W-2 or 1099.
- 5Separate transaction types: maintain separate logs for gains vs income.