Generally, per IRS guidelines, virtual currency is treated as property and general tax principles applicable to property transactions apply to transactions using virtual currency. When you sell virtual currency, you must recognize any capital gain or loss on the sale, subject to any limitations on the deductibility of capital losses. If you sold crypto or received rewards of $600 or more in the tax year, you will receive a Form 1099 from Robinhood for this tax season.

Robinhood doesn’t provide tax advice and you should consult a tax professional regarding any specific questions you have regarding taxes owed in connection with crypto transactions.

Cost basis is used to calculate capital gains taxes, and it’s typically the amount that you paid when buying an asset or the value determined at the time of receipt or transaction.

To help file your tax returns, we’ll provide the cost basis information (if available). Availability depends on where you acquired the crypto:

• If purchased through Robinhood, we have and will provide the cost basis information.
• If received from Robinhood as a reward, we’ll use a cost basis calculated as the fair market value at the time of receipt.
• If purchased at a different provider and transferred to Robinhood, we won’t have the cost basis because this information isn’t sent when transferring crypto.

In instances where we don’t have the cost basis, it’s your responsibility to calculate and report the proper cost basis on your tax return.

When you sell or withdraw crypto, tax lots will be closed using the First in, First out (FIFO) valuation method. This means the first coins you acquire (either through deposits or purchases) are used first (either through sales or withdrawals). An exception to this rule is when you have tax lots with a cost basis of zero (0) (i.e., from transfers into Robinhood). In this case, tax lots with an unknown or zero (0) cost basis will be closed first before applying the FIFO methodology.

On August 25, 2023, the IRS unveiled its proposed regulations regarding cryptocurrency taxes. Robinhood will promptly incorporate and adhere to the implemented guidelines while making any changes that may be necessary at that time.

What to expect in 2025

• Form 1099-DA: The Form 1099-DA is a new IRS form introduced to report digital assets, including cryptocurrencies. This form will replace the 1099-B as the form used to report cryptocurrencies.
• Similar to what is currently done on the 1099-B, gross proceeds will be reported to the IRS while gross proceeds and cost basis (where available) will be reported to customers.

What to expect in 2026

• Gross proceeds and basis reporting to both IRS and customers.
• Basis reporting would include Transfers of crypto assets.

Here are 2 sources for official IRS guidance on digital currencies:

• Final regulations and related IRS guidance
• IRS Form 1099-DA 2025 draft instructions

A reportable 1099 transaction may occur for a merge or hard-fork, there's a protocol change, and you receive a new cryptocurrency. However, there were no merge or hard-fork events for this tax year for any of the coins we support.

The year-end cutoff for crypto trades with Robinhood Crypto, LLC is 11:59 PM UTC on December 31 for this tax year.

Robinhood doesn’t provide tax advice. For specific questions, you should consult a tax professional.