Q1 2026 is the most critical quarter for crypto investors when it comes to taxes. The first three months of the year determine whether you file smoothly or scramble at the last minute. With new 1099-DA reporting requirements starting in 2026, this year is especially important to get right. Missing deadlines can cost you hundreds or even thousands in penalties.

내가 생각했을 때, most crypto investors underestimate how much preparation Q1 requires. They wait until April and then panic when they realize they need transaction history from five different exchanges and three DeFi protocols. The key is starting early and staying organized throughout the quarter. This calendar breaks down exactly what you need to do each month so you can file with confidence.

Whether you traded Bitcoin, staked Ethereum, farmed DeFi yields, or collected NFTs, this guide covers the deadlines and action items you need to know. The IRS is paying closer attention to crypto than ever before, and 2026 marks the first year of mandatory broker reporting. Being prepared is not optional anymore — it is essential for avoiding penalties and audits.

📅 January Deadlines & Tasks

January is the foundation month for your entire tax filing process. The most important deadline is January 15, 2026, when your Q4 2025 estimated tax payment is due. If you earned staking rewards, mining income, or had significant trading profits in October through December 2025, you need to make this payment to avoid underpayment penalties.

The penalty for underpayment is calculated daily and compounds quickly. For 2026, the IRS underpayment rate is expected to be around 8% annually. That means every $10,000 you underpay costs you approximately $800 per year in penalties, plus interest. Making your January 15 payment on time eliminates this risk for Q4 2025 income.

Beyond the payment deadline, January is when you should start gathering all your transaction records. Every exchange you used in 2025 — Coinbase, Kraken, Gemini, Binance.US, and others — will have transaction history available for download. Do not wait until February or March when their systems might be overloaded with tax season traffic.

For DeFi users, January is when you need to pull your on-chain transaction data. Tools like Etherscan, BscScan, and other block explorers let you export CSV files of all your wallet activity. If you used protocols like Uniswap, Aave, Compound, or Curve, you need records of every swap, deposit, withdrawal, and reward claim. This data does not come automatically — you have to actively retrieve it.

📅 January Action Checklist

Date	Action Item	Priority
Jan 1-5	Download all exchange transaction history	High
Jan 1-10	Export DeFi wallet transactions	High
Jan 15	Q4 2025 estimated tax payment due	Critical
Jan 20-31	Import data into tax software	Medium
Jan 31	1099-DA forms mailed by exchanges	Info

By January 31, exchanges are required to mail 1099-DA forms to customers for the first time in 2026. This is a major change from previous years when crypto reporting was largely self-reported. Expect to receive these forms in early to mid-February. However, do not rely solely on 1099-DA — it may not include all your transactions, especially if you used DeFi, self-custody wallets, or foreign exchanges.

One mistake I see every year is investors forgetting about staking rewards and mining income when calculating their estimated payment. Remember, staking rewards are taxed as ordinary income the moment you receive them. If you earned 2 ETH in staking rewards during Q4 when ETH was worth $3,500, that is $7,000 of taxable income you need to account for in your January 15 payment.

💰 Don't Miss Your January 15 Payment!

Pay your Q4 2025 estimated taxes now to avoid penalties.

💳 Pay Now via IRS Direct Pay

📋 February Tax Preparation

February is the month for organizing everything you gathered in January. By now you should have received your 1099-DA forms from exchanges, and your crypto tax software should have most of your transaction data imported. This is when you identify discrepancies, fix errors, and choose your cost basis method.

The first step in February is comparing your 1099-DA forms against your own records. Exchanges sometimes make mistakes, and the 2026 tax year is the first time they are issuing these forms. You may find transactions missing, incorrect cost basis reported, or even duplicate entries. Do not assume the 1099-DA is accurate — verify everything against your personal transaction history.

If your 1099-DA shows unknown cost basis for any transactions, you need to provide the correct figures yourself. The IRS assumes a cost basis of zero if no basis is reported, which means you would owe taxes on the entire sale proceeds as profit. This can dramatically inflate your tax bill if you do not correct it.

Choosing the right cost basis method can save you thousands of dollars. HIFO (Highest In, First Out) typically minimizes your taxable gains by assuming you sold the coins you paid the most for. However, once you choose a method, you should apply it consistently. Switching methods mid-year or between years can raise red flags with the IRS.

📋 Cost Basis Methods Comparison

Method	Description	Best For
FIFO	First In, First Out — oldest coins sold first	Rising markets, long-term holders
LIFO	Last In, First Out — newest coins sold first	Falling markets, minimizing gains
HIFO	Highest In, First Out — highest cost coins sold first	Minimizing taxable gains
Specific ID	You choose exactly which coins to sell	Maximum tax optimization

February is also when you should calculate your total crypto income for the year. This includes not just trading gains, but also staking rewards, mining income, DeFi yields, airdrops, and any crypto received as payment for goods or services. Each category may have different tax treatment, so separating them now makes filing much easier.

If you are using crypto tax software like CoinTracker, Koinly, or TaxBit, February is when you should run your first complete tax report. Review it carefully for any transactions marked as unknown, transfers incorrectly classified as sales, or missing cost basis. These tools are powerful but not perfect — human review is still essential.

📊 Need Help Calculating Your Crypto Taxes?

See our comparison of the best crypto tax software for 2026.

🔍 Best Crypto Tax Software 2026

📝 March Filing Strategies

March is decision time. You need to decide whether to file your taxes by April 15 or request an extension to October 15. Both options have pros and cons, and the right choice depends on your specific situation. Either way, March is when you finalize all your calculations and prepare your actual tax forms.

If your crypto transactions were straightforward — mostly buying and holding with a few sales — filing by April 15 is usually the better option. You get your refund faster (if applicable), avoid the stress of an extended deadline, and close out the tax year completely. Early filers also reduce their risk of identity theft, as scammers cannot file fraudulent returns in your name once you have already filed.

However, if you had complex activity — DeFi protocols, multiple wallets, NFT trading, staking across several platforms — an extension might be wiser. The extension gives you until October 15 to file, providing six extra months to sort out complicated transactions. Just remember: an extension to file is not an extension to pay. You still owe any taxes by April 15.

📝 Filing vs Extension Decision Guide

Situation	Recommendation	Reason
Simple trades only	File by April 15	Get refund faster, reduce fraud risk
Complex DeFi activity	Request extension	More time to categorize transactions
Missing 1099-DA forms	Request extension	Wait for corrected forms
Expecting refund	File by April 15	Get money sooner
Owe significant taxes	Either — but pay by April 15	Avoid penalties and interest

In March, you should finalize your Form 8949, which reports each individual crypto transaction. This form feeds into Schedule D, which summarizes your total capital gains and losses. If you have hundreds or thousands of transactions, crypto tax software generates these forms automatically — but always review them before filing.

📄 Need More Time to File?

Get until October 15, 2026 to file — but pay any taxes owed by April 15.

📝 Get Form 4868 Instructions

📄 1099-DA Forms — First Year

2026 marks a historic change in crypto taxation: the first year of mandatory 1099-DA reporting. Exchanges like Coinbase, Kraken, Gemini, and Binance.US are required to report your crypto transactions directly to the IRS. This is the biggest shift in crypto tax enforcement since the IRS first clarified that crypto is property in 2014.

You should receive your 1099-DA forms by mid-February. These forms report every sale, trade, and disposal that occurred on the exchange during 2025. The IRS receives an identical copy, so they know exactly what your exchange reported. Any discrepancy between your tax return and your 1099-DA will be flagged automatically.

The 1099-DA includes several key pieces of information: the date of each transaction, the type of transaction (sale, trade, etc.), the gross proceeds, the cost basis (if known), and the gain or loss. For the first few years, cost basis reporting may be incomplete because exchanges do not always have your full purchase history, especially if you transferred coins in from another platform.

📄 What Your 1099-DA Includes

Field	Description	Your Action
Gross Proceeds	Total value received from sales	Verify against your records
Cost Basis	What you paid for the crypto	Correct if shows "unknown"
Gain/Loss	Difference between proceeds and basis	Verify calculation is accurate
Date Acquired	When you bought the crypto	Check for long vs short-term
Date Sold	When you disposed of the crypto	Confirm matches your records

The biggest issue with 1099-DA forms in 2026 will be the unknown cost basis problem. If you transferred Bitcoin from a hardware wallet to Coinbase and then sold it, Coinbase does not know what you originally paid. They will report the cost basis as unknown, and the IRS will assume it is zero. This means you could be taxed on the entire sale amount as profit unless you provide the correct basis.

📄 First Year of 1099-DA Reporting

Learn what to expect and how to prepare for the new requirements.

📖 Read Our Complete 1099-DA Guide

💰 Q1 Estimated Tax Payments

If you expect to owe $1,000 or more in taxes for 2026, you are required to make quarterly estimated tax payments. Q1 covers income earned from January 1 through March 31, and the payment is due on April 15, 2026 — the same day as the tax filing deadline. This timing trips up many investors who focus on filing and forget about the estimated payment.

Estimated payments apply to all crypto income that is not subject to withholding. This includes trading profits, staking rewards, mining income, DeFi yields, and any crypto received as payment. Unlike a regular job where your employer withholds taxes from each paycheck, crypto income comes to you gross — and you are responsible for setting aside and paying the taxes yourself.

The safe harbor rule protects you from underpayment penalties if you pay either 100% of last year's tax liability or 90% of the current year's liability (whichever is smaller). If your adjusted gross income exceeded $150,000 last year, the threshold increases to 110% of last year's liability. Meeting one of these thresholds means no penalty, even if you ultimately owe more when you file.

💰 2026 Estimated Tax Payment Schedule

Payment	Income Period	Due Date
Q4 2025	Oct - Dec 2025	January 15, 2026
Q1 2026	Jan - Mar 2026	April 15, 2026
Q2 2026	Apr - May 2026	June 16, 2026
Q3 2026	Jun - Aug 2026	September 15, 2026
Q4 2026	Sep - Dec 2026	January 15, 2027

Calculating your Q1 estimated payment involves projecting your crypto income for the quarter. If you earned $10,000 in staking rewards during Q1, and you are in the 24% tax bracket, you would owe approximately $2,400 in federal income tax plus self-employment tax if applicable. Add state income tax based on your location. A good rule of thumb is to set aside 30-40% of all crypto income for taxes.

⚠️ Common Q1 Mistakes to Avoid

Every tax season, I see the same mistakes repeated by crypto investors. Understanding these common errors can save you money, stress, and potential IRS problems. Here are the most frequent Q1 mistakes and how to avoid them.

The number one mistake is waiting until April to start. Q1 preparation should begin in January, not in the final weeks before the deadline. Investors who wait find themselves scrambling to download transaction history, fix software errors, and understand complex transactions all under time pressure. This leads to mistakes and missed deductions.

Another major mistake is forgetting about crypto-to-crypto trades. Every time you swap Bitcoin for Ethereum, or exchange any crypto for another, you trigger a taxable event. The gain or loss is calculated based on the fair market value at the time of the trade. Many investors think only sales to USD are taxable — this is wrong and can result in massive underreporting.

⚠️ Common Q1 Mistakes

Mistake	Consequence	How to Avoid
Waiting until April	Errors, missed deductions	Start in January
Ignoring crypto-to-crypto trades	Underreporting income	Report every swap
Trusting 1099-DA blindly	Incorrect basis, overpaying	Verify against records
Missing staking/mining income	IRS mismatch notice	Track all income sources
Forgetting DeFi activity	Unreported income	Export wallet history
Missing estimated payment	Penalties and interest	Pay by January 15 and April 15

Forgetting about staking rewards and mining income is another frequent error. These are taxable as ordinary income when received, not just when sold. If you staked ETH throughout 2025 and earned rewards, each reward is a separate taxable event at the fair market value on the date of receipt. Use your staking platform's transaction history to identify every reward.

🚨 Avoid These Costly Errors

Know the IRS audit red flags before you file.

🔍 IRS Crypto Audit Red Flags 2026

❓ FAQ

Q1. When is the Q4 2025 estimated tax payment due?

A1. January 15, 2026. This covers crypto income earned from October through December 2025. Missing this deadline results in underpayment penalties.

Q2. When will I receive my 1099-DA forms?

A2. Exchanges must mail 1099-DA forms by January 31, 2026. Expect to receive them in early to mid-February. Check your exchange account for electronic versions as well.

Q3. What if my 1099-DA shows incorrect cost basis?

A3. Report the correct cost basis on your Form 8949. The IRS allows you to correct 1099 information, but keep documentation proving your actual cost basis in case they ask.

Q4. Should I file by April 15 or request an extension?

A4. If your crypto activity was simple, file by April 15 to get any refund faster. If you had complex DeFi transactions or missing information, an extension to October 15 gives you more time — but you still must pay any taxes owed by April 15.

Q5. Do DeFi transactions appear on 1099-DA forms?

A5. No. DeFi protocols and decentralized exchanges do not issue 1099-DA forms. You are responsible for tracking and reporting all DeFi activity yourself.

Q6. How much should I set aside for crypto taxes?

A6. A safe rule is 30-40% of all crypto income. This covers federal income tax, potential state tax, and self-employment tax if applicable. Adjust based on your specific tax bracket.

Q7. What is the penalty for missing estimated tax payments?

A7. The underpayment penalty is approximately 8% annually, calculated daily on the amount you underpaid. For a $10,000 underpayment over one year, that is about $800 in penalties plus interest.

Q8. Which cost basis method should I use?

A8. HIFO (Highest In, First Out) typically minimizes taxable gains. However, choose a method you can apply consistently year after year. Consult a tax professional if you are unsure which method is best for your situation.

📚 Related Articles

📄 1099-DA Crypto Tax Form 2026 — First Year Guide

📄 Crypto Staking Taxes 2026 — How Staking Rewards Are Taxed

📄 DeFi Taxes 2026 — Liquidity Pools & Yield Farming

📄 IRS Crypto Audit Red Flags 2026 — How to Avoid Getting Flagged

📄 Best Crypto Tax Software 2026

⚠️ Disclaimer

This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax laws are complex and subject to change. Consult a qualified tax professional for advice specific to your situation. The author and publisher are not responsible for any actions taken based on this information.

Last Updated: December 28, 2025 | Sources: IRS Publications, IRS Virtual Currency FAQ, Form 8949 Instructions

January Crypto Tax Checklist 2026 — Complete Week-by-Week Guide

January Crypto Tax Checklist 2026

✍️ Author Information

Written by: Davit Cho

Crypto Tax Specialist | CEO at JejuPanaTek (2012~) | Patent Holder (Patent #10-1998821)

7+ years crypto investing experience since 2017 | Personally filed crypto taxes since 2018

Contact: davitchh@gmail.com

Blog: legalmoneytalk.blogspot.com

Last Updated: December 24, 2025 | Fact-Checked: Based on IRS Publications & Official Guidelines

January is the most critical month for crypto tax preparation. The actions you take now directly determine whether tax season becomes a stressful nightmare or a smooth, organized process. Most investors wait until April and scramble to piece together a year's worth of transactions under deadline pressure.

In my experience, investors who complete their crypto tax prep in January save an average of 10-15 hours compared to those who wait until March or April. Early preparation also catches errors and missing data while there's still time to request records from exchanges or reconstruct lost transactions.

This week-by-week checklist breaks down everything you need to accomplish in January 2026. Follow this systematic approach and you'll enter February with complete, accurate records ready for tax filing or handoff to your CPA.

📅 January 2026 Key Dates

🔴 January 15: Q4 2025 Estimated Tax Payment Due

📧 January 31: Exchanges issue 1099 forms

🆕 2026: New Form 1099-DA reporting begins

📋 January Goal: Complete all 2025 record gathering

📅 Week 1: Gather All Transaction Data

The first week of January focuses entirely on collecting every piece of transaction data from 2025. This foundation step is critical because missing transactions lead to incorrect cost basis calculations, understated gains, and potential IRS audit triggers.

Start with centralized exchanges where you likely have the most transaction volume. Log into Coinbase, Kraken, Gemini, Binance.US, and any other platforms you used during 2025. Navigate to the tax or reports section and export complete transaction histories in CSV format.

Name files clearly with the exchange name and year: "Coinbase_2025_Transactions.csv" or "Kraken_2025_Full_History.csv". Store all exports in a dedicated folder on your computer and back up to cloud storage immediately. Exchange data can become unavailable without warning.

DeFi transactions require additional effort since they don't appear on centralized exchange reports. Connect your wallet addresses to aggregators like DeBank, Zapper, or Zerion to view your complete DeFi history. Export transaction lists for each chain including Ethereum, Arbitrum, Base, Solana, and others you used.

📅 Week 1 Data Collection Checklist

Source	Data to Export	Where to Find	Priority
Coinbase/Coinbase Pro	Full transaction history	Settings > Taxes	Day 1
Kraken	Ledger export (all trades)	History > Export	Day 1
Gemini	Transaction history CSV	Account > Statements	Day 2
DeFi Wallets	All chain transactions	DeBank, Zapper, Etherscan	Day 3-4
NFT Marketplaces	Buy/sell history	OpenSea, Blur profiles	Day 5
Mining Pools	Payout records	Pool dashboard	Day 5
Staking Platforms	Reward history	Platform reports	Day 6

Source: IRS Notice 2014-21 | Complete transaction records required for accurate reporting

Don't forget hardware wallet transactions. Check your Ledger Live or Trezor Suite history, but remember these only show transactions you initiated through their interfaces. For complete records, look up your wallet addresses directly on blockchain explorers like Etherscan, Solscan, or Blockchair.

NFT activity requires special attention. OpenSea, Blur, Magic Eden, and other marketplaces track your buy and sell history, but gas fees, failed transactions, and cross-marketplace activity may only appear on-chain. Export your profile history from each platform and cross-reference with blockchain data.

Mining and staking income must be documented with dates and fair market values at receipt. Mining pools typically provide payout history dashboards. Staking platforms like Lido, Rocket Pool, or exchange staking programs have reward tracking features. Download complete 2025 records from each source.

Airdrops, forks, and promotional rewards are taxable income often missed by investors. Search your wallet history for unexpected token receipts. Check airdrop tracking sites like Earni.fi for claims you may have made. Each receipt requires documentation of the date and fair market value.

📚 Transaction Data Resources

Tools for gathering and organizing your crypto transaction history.

🔍 DeBank - DeFi Portfolio Tracker

📊 Etherscan - Ethereum Blockchain Explorer

📖 IRS Virtual Currency Guidance

🔍 Week 2: Reconcile & Verify Records

Week 2 focuses on importing your collected data into crypto tax software and identifying any gaps or errors. Raw exchange exports often contain incomplete information, duplicate entries, or transactions that need manual categorization.

Choose your crypto tax software platform if you haven't already. Popular options include CoinTracker ($59-$199/year), Koinly ($49-$279/year), TaxBit (free-$175/year), and CoinLedger ($49-$299/year). Each platform offers direct exchange integrations and CSV import functionality.

Import your centralized exchange data first using API connections when available. API imports pull data directly from exchanges, reducing manual errors and ensuring you capture all transactions including deposits, withdrawals, and trades. Connect Coinbase, Kraken, Gemini, and other supported platforms.

Upload CSV exports for exchanges without API support or for DeFi wallet data. Your tax software will attempt to parse and categorize each transaction. Review the import results carefully, as automated categorization isn't always accurate.

🔍 Common Reconciliation Issues

Issue	Symptoms	Solution
Missing Cost Basis	Warnings about unknown acquisition	Add manual purchase records or transfer history
Duplicate Transactions	Same trade appearing twice	Delete duplicate entries from imports
Unmatched Transfers	Withdrawals not linked to deposits	Manually match send/receive pairs
Wrong Transaction Type	Trade labeled as income or vice versa	Edit transaction category manually
Missing DeFi Transactions	Balance doesn't match wallet	Import additional wallet addresses

Source: Common issues identified by major crypto tax software providers

Verify your ending balances match actual wallet holdings. Most tax software shows a calculated balance based on imported transactions. If this doesn't match your real holdings, you have missing transactions somewhere. Track down the discrepancy by checking each wallet and exchange.

Transfers between your own wallets should be marked as non-taxable transfers, not dispositions. Sending Bitcoin from Coinbase to your Ledger isn't a sale, but software sometimes misclassifies these movements. Review large "sales" that might actually be transfers.

Lost or stolen crypto requires documentation if you plan to claim a casualty loss. While tax treatment of crypto theft is complex after the 2017 tax law changes, maintaining records of security incidents is important. Document any hacks, scams, or lost wallet situations from 2025.

Create a spreadsheet for transactions that can't be imported automatically. Peer-to-peer trades, crypto received as payment for services, gifts given or received, and other non-exchange transactions need manual entry with date, amount, fair market value, and counterparty information when applicable.

Cross-reference your records against any 1099 forms you receive. Starting in 2026, Form 1099-DA will be issued by crypto brokers. Compare reported figures against your own calculations. If discrepancies exist, determine whether the issue is on your side or the broker's reporting.

🔧 Crypto Tax Software Comparison

Compare features and find the right tool for your needs.

📊 Best Crypto Tax Software 2026 — Full Comparison

💰 Week 3: Calculate Gains & Losses

With clean, reconciled data in your tax software, Week 3 focuses on running final calculations and optimizing your cost basis method. The choices you make now directly impact your tax liability, so take time to analyze different scenarios before finalizing.

Generate preliminary tax reports using your software's default settings, typically FIFO (First In, First Out). Review the summary showing total capital gains, capital losses, short-term vs long-term breakdown, and ordinary income from mining, staking, or airdrops.

Compare different cost basis methods by toggling between FIFO, LIFO, HIFO, and Specific Identification in your tax software. Most platforms allow instant recalculation. Document the tax impact of each method to choose the most advantageous approach for your situation.

Pay special attention to the short-term vs long-term split. Short-term gains (assets held less than one year) are taxed at ordinary income rates up to 37%. Long-term gains benefit from preferential rates of 0%, 15%, or 20% depending on your total income. Your cost basis method affects which lots are sold first and their holding periods.

💰 Cost Basis Method Tax Impact Example ($50,000 in Sales)

Method	Calculated Gain	ST/LT Split	Est. Tax (24% bracket)
FIFO	$32,000	20% ST / 80% LT	$5,376
LIFO	$18,000	70% ST / 30% LT	$3,834
HIFO	$12,000	55% ST / 45% LT	$2,520

Example only. Actual results vary based on individual transaction history. | Source: IRS Publication 550

Separate your income types for accurate reporting. Capital gains from trading go on Form 8949 and Schedule D. Mining income is self-employment income on Schedule C. Staking rewards may be ordinary income on Schedule 1 or Schedule C depending on your situation. Properly categorized income ensures correct tax treatment.

Calculate any remaining tax-loss harvesting opportunities for Q4 2025 if you haven't filed yet. Some investors realize they have additional losses that could offset gains. If you made trades before December 31, ensure they're included in your 2025 calculations.

Review your total ordinary income from crypto sources. Mining rewards, staking income, airdrops, and payment for services are all taxed at ordinary income rates. This income also triggers self-employment tax of 15.3% if you're operating as a business rather than a hobby.

Check for Net Investment Income Tax (NIIT) implications. If your modified AGI exceeds $200,000 (single) or $250,000 (married filing jointly), you may owe an additional 3.8% tax on investment income including crypto capital gains. Factor this into your total liability estimate.

Generate carryforward loss reports if applicable. If your 2024 return included capital loss carryforwards, ensure your 2025 calculations incorporate these amounts. Losses carried forward offset 2025 gains before any new losses are applied.

💰 Tax Calculation Resources

Official IRS guidance on capital gains and cost basis.

📖 IRS Topic 409 - Capital Gains and Losses

📖 IRS Publication 550 - Investment Income

📝 Week 4: Prepare Tax Documents

The final week of January focuses on generating official tax forms and organizing all supporting documentation. Whether you file yourself or hand off to a CPA, having complete, organized materials saves time and reduces errors.

Generate Form 8949 from your crypto tax software. This form lists every individual disposition with acquisition date, sale date, proceeds, cost basis, and gain or loss. Depending on your transaction volume, you may have dozens or hundreds of pages. Most software generates IRS-ready PDFs.

Create Schedule D summary from your Form 8949 data. Schedule D aggregates your short-term and long-term totals and calculates your net capital gain or loss. This summary form is what actually gets filed with your return, with Form 8949 attached as supporting detail.

Prepare Schedule C if you have mining or trading business income. This form reports your gross income and business deductions, calculating net profit or loss from self-employment. You'll also need Schedule SE to calculate self-employment tax on this income.

📝 Tax Forms Checklist

Form	Purpose	Who Needs It	Source
Form 8949	Report individual transactions	All crypto sellers	Crypto tax software
Schedule D	Summarize capital gains/losses	All crypto sellers	Crypto tax software
Schedule C	Report business income/expenses	Miners, active traders	Manual or tax prep software
Schedule SE	Calculate self-employment tax	Schedule C filers	Tax prep software
Schedule 1	Report additional income	Hobby miners, stakers	Tax prep software
Form 1040	Main tax return	Everyone	Tax prep software

Source: IRS Form Instructions | All crypto activity must be reported on Form 1040

Compile supporting documentation in an organized folder structure. Keep original exchange exports, tax software reports, cost basis calculations, and any manual transaction records. This documentation defends your position if the IRS questions your return.

Answer "Yes" to the digital asset question on Form 1040. This question asks whether you received, sold, exchanged, or otherwise disposed of digital assets during the year. Answering "No" when you had crypto activity is considered a false statement.

Review any 1099 forms received from exchanges. Coinbase, Kraken, and other platforms issue 1099-MISC for income over $600 and will issue new 1099-DA forms starting in 2026. Ensure amounts reported match your calculations, or document the discrepancy.

Prepare your CPA package if using a tax professional. Include all generated tax forms, summary of crypto activity, notable transactions or situations requiring attention, and questions about specific treatment. A well-organized package reduces billable hours and ensures nothing is missed.

Calculate your estimated tax liability to avoid surprises. Before filing, understand approximately what you'll owe. If the amount is significant, plan your cash flow for the April 15 payment deadline. Consider whether you need to make additional estimated payments.

📝 Tax Forms & Instructions

Download official IRS forms and instructions.

📝 Form 8949 - Sales and Dispositions

📝 Schedule D - Capital Gains and Losses

📝 Schedule C - Profit or Loss from Business

⏰ Critical January Deadlines

January contains several critical tax deadlines that crypto investors must not miss. Mark these dates on your calendar and set reminders at least one week in advance to ensure timely action.

January 15, 2026 is the deadline for Q4 2025 estimated tax payments. If you owed estimated taxes for the October-December 2025 period, payment must be received by this date to avoid underpayment penalties. Use IRS Direct Pay for immediate processing.

By January 31, 2026, exchanges must issue 1099 forms to users. This includes 1099-MISC for staking rewards or promotional income, and the new 1099-DA for digital asset transactions. Watch your mail and email for these documents, and verify amounts against your records.

If you missed the 2025 S-Corp election deadline and want to elect for 2026, start preparing Form 2553 now. The filing deadline is March 15, 2026, but gathering required information takes time. Contact your CPA in January to begin the process.

⏰ January 2026 Tax Calendar

Date	Deadline	Action Required
January 1	New tax year begins	Start gathering 2025 records
January 15	Q4 2025 Estimated Tax Due	Pay via IRS Direct Pay
January 31	1099 forms issued	Receive & verify exchange 1099s
Late January	Complete prep goal	Finish all 2025 record organization

Source: IRS Tax Calendar | Set reminders 7 days before each deadline

Solo 401k contributions for 2025 have a split deadline. Employee contributions must have been made by December 31, 2025. Employer profit-sharing contributions can still be made until your tax filing deadline, including extensions (October 15, 2026 if extended).

SEP-IRA and Traditional IRA contributions for 2025 can still be made until April 15, 2026. Use January to calculate maximum contribution amounts based on your 2025 income. Open accounts if needed, as funding requires an established account.

Check state-specific deadlines if your state has income tax. Most states follow federal deadlines, but some have different dates or requirements. Research your state's tax authority website for accurate information.

⏰ Don't Miss: January 15 Payment

Q4 2025 estimated tax payment due January 15, 2026.

💳 IRS Direct Pay - Make Payment Now

📝 Form 1040-ES Instructions

⚠️ Common January Mistakes to Avoid

Even well-intentioned investors make costly mistakes during January tax preparation. Awareness of these common pitfalls helps you avoid them and ensures accurate, complete tax reporting.

Waiting too long to export exchange data is the number one mistake. Exchanges can remove historical data, change export formats, or even shut down entirely. Export everything in the first week of January while 2025 data is still fresh and accessible.

Forgetting DeFi transactions leads to massive underreporting. Many investors focus only on centralized exchange activity and completely miss DEX swaps, liquidity provision, yield farming, and other DeFi interactions. Every token swap is a taxable event.

Treating transfers as sales inflates your gains incorrectly. Moving Bitcoin from Coinbase to your Ledger isn't a sale. Ensure your tax software correctly categorizes these as non-taxable transfers between your own wallets.

⚠️ Top January Tax Prep Mistakes

Mistake	Consequence	How to Avoid
Waiting to export data	Data becomes unavailable	Export Week 1 of January
Missing DeFi transactions	Underreported income/gains	Use DeBank/Zapper for all wallets
Transfers marked as sales	Inflated gains, double taxation	Review & recategorize transfers
Ignoring staking/mining income	Unreported ordinary income	Track all reward receipts
Not comparing cost basis methods	Higher taxes than necessary	Run FIFO/LIFO/HIFO comparisons
Missing January 15 payment	Underpayment penalties	Set reminder, pay early

Source: Common errors identified by crypto tax professionals

Ignoring staking and mining income is another frequent error. These rewards are taxable as ordinary income at the time you receive them. The fair market value at receipt becomes your cost basis for future sales. Track every reward transaction with date and USD value.

Not comparing cost basis methods leaves money on the table. The difference between FIFO and HIFO can be thousands of dollars in tax savings. Spend 30 minutes running comparisons in your tax software before finalizing your approach.

Forgetting about airdrops and free crypto creates unreported income. Those "free" tokens from airdrops, referral bonuses, or learn-and-earn programs are all taxable at fair market value when received. Search your wallet history for unexpected token arrivals.

Using the wrong exchange for fair market value causes cost basis errors. If you received Bitcoin at 3 AM on a small DEX, the price may differ significantly from Coinbase at that moment. Use consistent, reputable price sources for all valuations.

Missing the January 15 estimated payment deadline triggers penalties. Even if you file an extension later, quarterly estimated payments are still due on their original dates. Late payments accrue interest and penalties from the deadline date.

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❓ FAQ

Q1. When should I start gathering my crypto tax documents?

A1. Start the first week of January. Export all exchange and wallet data immediately while 2025 records are still accessible. Waiting risks data becoming unavailable or formats changing.

Q2. What happens if I miss the January 15 estimated tax payment?

A2. The IRS charges underpayment penalties calculated from January 15 until payment is received. Current penalty rates are tied to federal short-term interest rates. Pay as soon as possible to minimize penalties.

Q3. Do I need to report crypto if I only held and didn't sell?

A3. Simply holding crypto isn't taxable. However, you must still answer "Yes" to the digital asset question on Form 1040 if you received crypto through mining, staking, airdrops, or payment for services, even if you didn't sell.

Q4. How do I find DeFi transactions that aren't on exchanges?

A4. Use portfolio trackers like DeBank or Zapper that scan blockchain data for all wallet addresses. Also check Etherscan, Arbiscan, Solscan, and other chain-specific explorers for complete transaction histories.

Q5. Which cost basis method should I use?

A5. Run comparisons in your crypto tax software. HIFO (Highest In, First Out) typically minimizes gains, but the best method depends on your specific transaction history. Choose the method that legally reduces your tax liability.

Q6. What if my exchange-issued 1099 doesn't match my records?

A6. Document the discrepancy and determine the correct amount. Report your accurate figures on your return. The IRS receives copies of 1099s, so significant differences may trigger questions. Keep detailed records explaining any variance.

Q7. Can I still contribute to retirement accounts for 2025?

A7. Yes, Traditional IRA, Roth IRA, SEP-IRA, and HSA contributions for 2025 can be made until April 15, 2026. Solo 401k employer contributions can also be made until your filing deadline. Employee 401k contributions must have been made by December 31, 2025.

Q8. Should I hire a CPA or use tax software?

A8. For straightforward situations with fewer than 100 transactions, tax software is often sufficient. Complex situations involving mining income, business structure decisions, or significant amounts benefit from professional CPA review. Many investors use software to generate forms, then have a CPA review before filing.

⚠️ Disclaimer

This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax laws are complex and individual circumstances vary significantly. The information provided is based on current IRS publications and regulations as of December 2025, which may be subject to change.

Consult with a qualified CPA, tax attorney, or other licensed professional before making any tax-related decisions. The author and publisher are not responsible for any errors, omissions, or actions taken based on this information.

Sources: IRS Notice 2014-21 | IRS Publications 550, 505 | IRS Topics 305, 409 | IRS Forms 8949, Schedule D, Schedule C

Last Updated: December 24, 2025 | Author: Davit Cho | Contact: davitchh@gmail.com

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