Do I Have to Pay Taxes on Cryptocurrency I Sold?

Yes — the IRS treats cryptocurrency as property, not currency, which means selling, trading, converting, or spending crypto triggers a taxable event that must be reported on your federal tax return. When you sell crypto, you owe tax on the gain — the difference between what you received and your cost basis (what you originally paid). If you held the crypto for more than a year, the gain is taxed at long-term capital gains rates (0%, 15%, or 20%); if you held it for a year or less, it's taxed as ordinary income. Trading one cryptocurrency for another (for example, swapping Bitcoin for Ethereum) is also a taxable event — you're treated as if you sold the first coin for its fair market value on the date of the trade. Receiving crypto as payment for services is taxed as ordinary income based on the fair market value at the time you received it. The IRS now includes a question at the top of Form 1040 asking whether you received, sold, or otherwise disposed of any digital assets during the year, and simply checking "no" when you did is a red flag.