Half Crypto Users Don't Understand Tax Rules

Over half of US crypto users don't understand the scary tax rule that can lead to overpayment or under-reporting. 61% of users are unaware of specific tax rules for the 2025 tax year reporting.

Crypto Tax Confusion

The majority of crypto customers still don't understand how crypto is taxed, mistakenly believing simple transfers trigger tax events. According to a survey of 3,000 US crypto users, 49% of users correctly understand that a tax event is triggered anytime crypto is sold.

Cost Basis and Taxable Events

Most crypto investors intend to comply with tax law, but major confusion reigns amongst traders about cost basis, taxable events, and evolving IRS regulations. 22% of users fall under the misconception that a simple transfer to other accounts is taxable.

Understanding Taxable Events

Under current US rules, most crypto is treated as property, which means selling, trading, swapping into another coin, or even paying fees can trigger capital gains or losses that must be reported. Lawrence Zlatkin, Vice President of Tax at Coinbase, says, "Users are struggling to navigate the complexities of crypto taxation".

Broker Reporting and Tax Software

Brokers like Coinbase will now send standardized forms (1099-DA) reporting proceeds, but they cannot see every DeFi or DEX leg in a strategy, leaving many users with forms that show large gross figures and no context unless they use specialized tax software.

Key Takeaways

• Over half of US crypto users don't understand the tax rules for crypto transactions.
• 61% of users are unaware of specific tax rules for the 2025 tax year reporting.
• Crypto investors should use specialized tax software to navigate the complexities of crypto taxation.
• Understanding taxable events and cost basis is crucial to avoiding overpayment or under-reporting.

Frequently Asked Questions

What is a taxable event in crypto?

A taxable event in crypto is triggered when crypto is sold, traded, swapped, or used to pay fees, resulting in capital gains or losses that must be reported.

How can I avoid overpayment or under-reporting?

Using specialized tax software and understanding taxable events and cost basis can help avoid overpayment or under-reporting, and savvy traders should treat tax drag as part of their strategy design.