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Digital Assets Question on Form 1040: Yes or No?

Short answer: The IRS says every federal income tax return carries a Yes/No question: "At any time during the tax year, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?" Answer No if you only bought, held or moved digital assets between your own wallets. Answer Yes if you received digital assets as payment, a reward or an award, or disposed of them.

Answer No if you (IRS list)

• didn't own any digital assets;
• only owned or held digital assets in a wallet or account, with no transactions during the year;
• purchased digital assets with U.S. or other real currency, including through electronic platforms, but didn't sell them;
• transferred digital assets from one wallet or account you own or control to another you own or control, unless you paid a transaction fee with digital assets (that is a digital asset transaction).

Answer Yes if you (IRS list)

• received digital assets as payment for property or services, as a reward or award, from "mining, staking and similar activities", or from an airdrop as it relates to a hard fork;
• disposed of, sold, exchanged or transferred ownership of digital assets for another digital asset, for U.S. dollars or other currency, in exchange for property, goods or services in any amount, by paying a transfer fee with digital assets, or by transferring ownership or a financial interest. A "financial interest" includes being recorded as the owner, having an ownership stake in an account that holds digital assets, or owning a wallet that holds them.

If you answer Yes

The IRS says you must report digital asset transactions whether or not they result in a taxable gain or loss, and keep records (purchase, receipt, sale, exchange, any other disposition, and the U.S.-dollar fair market value of assets received as income or as business payment). Gains and losses go on Form 8949 (1099-DA vs Form 8949).

Where the question appears

The IRS lists Forms 709, 1040 and 1040-SR, 1040-NR, 1041, 1065, 1120 and 1120-S.

For 2026 returns

The wording above is on current IRS pages; the 2026 Form 1040 text is expected to be the same, but we didn't read it.

Related

No 1099-DA? You still report

FAQ

I bought bitcoin and held it. Yes or No? No, per the IRS list. I moved coins between my own wallets and paid the fee in coins. Yes: paying a fee with digital assets counts.

What we could not verify

• The 2026 Form 1040 question wording and any change in the IRS questionnaire (not read).
• How the question applies to DeFi, wrapping or liquidity activity: not addressed here.
• The IRS interactive questionnaire (linked from the page; not read).
• State return questions.

Sources (official)

• IRS, Digital assets (page last reviewed or updated September 2, 2026) — https://www.irs.gov/filing/digital-assets (read in full October 17, 2026)

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Not tax advice. Examples use made-up figures. Nothing here has been reviewed by a tax professional. We may earn commissions from affiliate links where marked; see the disclosure.