Reporting a crypto account with a small amount of crypto

[25kona]

I started a couple small crypto accounts in 2025. My activities in both apps only included:

• Purchasing crypto with USD (US Dollars)
• Receiving small rewards for using the crypto app.

Where must I input this on my 2025 Federal and California returns?

Thanks!

[JamesG1 · Accepted solution]

The simple purchase of cryptocurrency in 2025 is likely not a taxable event.  The TurboTax Cryptocurrency Guide states:

If merely bought and held, it’s not taxed until something is done with it, such as disposal.

Depending on the situation, cryptocurrency is taxed as:

• Ordinary income, if for example, it earns a return for the holder from an income stream (rewards), or
• A capital gain or loss from a sale of property after its value has increased or decreased.

A capital gain or loss will result from the disposal of cryptocurrency:

• As payment for goods or services received,
• In exchange for cash, or 
• In exchange for a different cryptocurrency.

This tax year introduces a new IRS tax form 1099-DA Digital Asset Proceeds From Broker Transactions.  IRS Form 1099-DA will be used by brokers to report proceeds from (and in some cases, basis for) digital asset dispositions to you and the IRS.

Enter staking rewards in TurboTax as other income.

Follow these steps to enter in TurboTax Online:

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Click the down arrow to the right of Other Common Income.
• Click to the right of Form 1099-MISC.
• At the screen Let's enter the income, enter the information from the form.
• At the screen Describe the reason, enter 'staking rewards'.  Click Continue.
• At the screen Do one of these uncommon situations apply, select None of these apply.  Click Continue.
• At the screen Did the staking rewards involve work that's like your main job?, select No.  Click Continue.
• At the screen How often did you get income for staking rewards?, select the answer.  Click Continue.
• At the screen Did the staking rewards involve an intent to earn money?, select No.  Click Continue.

The entries will be reported:

• on line 8z of Schedule 1 of the Federal 1040 tax return, and 
• on line 8 of the Federal 1040 tax return.

The IRS has ruled that staking rewards only become taxable once the taxpayer "acquires the ability to transfer, sell, exchange, or otherwise dispose of the cryptocurrency."  You will need to convert your rewards to US dollars if they have not been issued in U.S. dollars.

[25kona]

Thanks, this was so helpful!

Have a great day.

[25kona]

Is there a de minimus rule that would waive small amounts of rewards or crypto conversions from being reportable? 

For example, I have less than $5 in rewards and what appears to be less than $5 converting from a stablecoin to a crypto currency.

[RogerD1]

No, there isn't a de minimis rule for income reporting.  From IRS Taxable Income: "Most income is taxable unless it's specifically exempted by law.  Income can be money, property, goods or services.  Even if you don't receive a form reporting income, you should report it on your tax return".  Because of this, you should report this income on your return - it will have minimal to no impact on your tax liability and reporting it will keep you compliant.