Crypto Tax Checklist for 2025: A NJ CPA’s Guide to Digital Asset Reporting

Cryptocurrency and other digital assets have gone mainstream – and the IRS (along with NJ Division of Taxation) are keenly aware. As we head into the 2025 tax filing season (for 2024 activity) and beyond, crypto investors need to ensure they’re fully compliant. As crypto tax reporting becomes more complex, understanding the new rules for crypto tax reporting 2025 is essential for every investor and small business owner. Below is a comprehensive crypto tax checklist curated by a NJ CPA, to help you prepare your records and avoid common pitfalls:

☑ Answer the IRS Crypto Question Honestly

On your Form 1040 for 2024, you must check “Yes” or “No” in response to a question about digital assets. The wording (for 2023 filings) was: “At any time during the year, did you (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, gift, or otherwise dispose of any digital asset (or financial interest in a digital asset)?” Virtually all crypto users will answer “Yes”, unless your only activity was holding crypto in a wallet and not transacting at all. Buying crypto with USD alone (no sales) might be “No”, but if you did anything else – even swapping one coin for another or using crypto to buy something – you have to check Yes. Be truthful – the IRS uses this as a quick audit filter. Brokers will send 1099-DA for 2025 transactions (arriving early 2026). Basis reporting generally starts for 2026 sales. For NJ purposes, there’s no separate question, but since NJ starts from your federal income, it’s critical to report everything federally.

☑ Compile All Transaction History 

Gather records from every exchange, wallet, and platform you used. This includes centralized exchanges (Coinbase, Kraken, Binance US, etc.), DeFi platforms (Uniswap trades, lending protocols), NFT marketplaces, and crypto payment apps. You need the full transaction history: dates, amounts, and values in USD at the time of each transaction. Most major exchanges let you download a CSV or use an API to retrieve this data. For decentralized activity, you might rely on blockchain explorers or specialized crypto tax software that can read your wallet address. Don’t forget airdrops or forked coins you received (those are taxable income at receipt) and mining or staking rewards (taxable as income when received). Many people have numerous small transactions – using software like CoinTracker, Koinly, or CoinLedger can aggregate and calculate gains, but you’ll still want to spot-check the data. By the end, you should have a spreadsheet or report listing every taxable event: each sale, trade, spend, or income event.

☑ Calculate Capital Gains and Losses

For each disposition of crypto, you must calculate the gain or loss. This means knowing the cost basis (what you originally paid for that crypto) and the proceeds (value when you sold or spent it). If you traded crypto-to-crypto (say Bitcoin for Ethereum), that counts – the BTC is “sold” for the value of ETH you received. Mark whether each is short-term (held ≤ 1 year) or long-term (>1 year), as they are taxed at different rates. If you have multiple acquisition lots, decide on a costing method – IRS allows FIFO by default, but specific identification can be used if you have detailed records. Most crypto tax tools default to FIFO unless you specify otherwise. Summarize your total short-term gains/losses and long-term gains/losses. Good news: If you have net capital losses, you can use them to offset other gains and then up to $3,000 of ordinary income per year, with excess carried forward. With 2022–2023’s crypto downturn, many NJ crypto investors have losses to harvest.

☑ Review Taxable Income from Crypto

Beyond trades, identify any crypto-related income that must be reported on Schedule 1 or Schedule C. Common examples: - Staking or Mining Income: The fair market value of rewards/coins you received from staking (e.g., Ethereum staking rewards) or mining (Bitcoin block rewards) is taxable as ordinary income at the time you gain control of them. This might be reported on 1099-MISC by some platforms or not reported at all – but you must include it. Keep records of coin amounts and USD value at receipt (e.g., 0.5 ETH mined on March 1 when ETH was $1,600 = $800 income). - Airdrops/Hard Forks: If you received an airdrop or new tokens from a network fork, that value is also income when you have dominion over the coins (even if you didn’t ask for them). The basis in those coins becomes that income value. - Crypto as Payment for Services: If you accepted crypto as a form of payment in your business or gig, treat it just like cash income – report the USD value as business income. For example, a freelance web designer in NJ paid in Bitcoin must report that BTC’s value as income (and also then account for gain/loss when they eventually sell the BTC). - NFT Sales: If you created and sold NFTs, the proceeds are income (self-employment income if it’s an ongoing business activity). If you sold NFTs you held as an investment, it’s a capital gain/loss like other crypto. Also, NFT royalties are income.

☑ Don’t Forget NJ State Tax Implications 

For NJ individual taxes, crypto gains are generally taxable in the category of capital gains (taxed at NJ’s income rates). New Jersey doesn’t allow the federal $3,000 capital-loss deduction against other income and doesn’t allow carryforwards. You can only net gains and losses within NJ’s ‘Net Gains from Disposition of Property’ category for the year. Also, NJ doesn’t tax intangible asset exchanges differently – so assume your crypto profits are taxed similarly by NJ as by IRS, and report them on the NJ return in the “Net Gains from Disposition of Property” category. One nuance: NJ might not follow certain future federal crypto-specific rules automatically, since NJ tax law doesn’t automatically conform to all IRC changes. For now, treat crypto gains as you do federally. If you’re a NJ business accepting crypto, when you eventually convert that crypto to USD it could have sales tax implications if it was for a taxable product – but that’s more on the business operations side.

☑ Plan for New Reporting Changes

The IRS is stepping up enforcement. Starting with 2025 transactions, brokers and exchanges will issue Form 1099-DA reporting your gross proceeds from crypto trades. In early 2026, you may receive these forms which the IRS will use to cross-check. Note: for 2025 the 1099-DA likely will not report your cost basis (similar to early stock 1099-Bs) – it may only show what you sold crypto for, not what you paid. This means the onus is still on you to maintain records to substantiate your cost basis. If you fail to report a trade, the IRS could think the entire proceeds are gain. So it’s crucial to track. By checking your own records against any 1099s, you can catch discrepancies. For third-party apps (Form 1099-K), the IRS set $5,000 for 2024, $2,500 for 2025, and $600 starting in 2026. Basically, expect more tax forms in the mail than in past years – gather them all and reconcile with your self-prepared gain/loss reports.

☑ Leverage the Crypto Tax “Loopholes” Still Open

As of 2025, crypto is not subject to the wash sale rule, unlike stocks. This presents a year-end planning opportunity: you can sell losing positions by Dec 31 to realize losses for tax purposes, and if you still like the asset, immediately buy it back (crypto prices can be volatile, so this avoids missing a rebound). The IRS wash-sale rule, which disallows a loss if you buy the same stock within 30 days, “doesn’t apply to crypto because the IRS considers it property, not a security”. Use this to your advantage: it’s called tax-loss harvesting. Many NJ investors harvested losses in the 2022 crypto winter to offset other income – and they could re-enter their crypto positions without waiting. Congress has proposed extending wash sales to crypto, but as of now it’s still a valid strategy. Just be sure any losses you claim are genuine economic losses (no related party shenanigans) and that you document the sale and repurchase dates/prices.

☑ Consult a Crypto-Savvy CPA

This might sound self-serving, but crypto taxation gets complex quickly. If you engaged in DeFi lending, liquidity pools, margin trading, or received obscure tokens, the treatment can be nuanced (is it interest income? is a loan taxable? etc.). A CPA experienced in crypto (like Monaco CPA LLC – we pride ourselves on being crypto-savvy) can help categorize and report these correctly. Also, if you have a large amount of crypto or complicated situation (like you lost access to a wallet, or you’re involved in an NFT business venture), professional guidance is invaluable. The IRS is investing in crypto tax enforcement – from hiring experts to issuing John Doe summons to exchanges. New Jersey too will tax your crypto gains once they hit your state return. So this isn’t the area to take wild positions without advice (for example, some people mistakenly think “crypto isn’t taxed until you cash out to USD” – not true, every trade or spend is taxable). When in doubt, get advice rather than risk an audit or penalty.

By ticking off the above checklist, you’ll be well-prepared to file an accurate crypto tax report. You’ll also gain peace of mind that you’re on the right side of tax law while investing in this exciting asset class. Crypto taxes may be evolving, but with good records and the right help, you can navigate them just fine – and stay IRS-compliant in 2025 and beyond. Our goal is to simplify crypto tax reporting 2025 for New Jersey investors and business owners so you can stay compliant with confidence.

Ready to Simplify Your Crypto Tax Reporting for 2025?

At Gregory Monaco, CPA LLC in Livingston, NJ, we help crypto investors and small business owners stay compliant with evolving IRS and New Jersey tax regulations. Whether you’re trading, staking, mining, or accepting digital assets as payment, our crypto-savvy CPA team ensures your reporting is accurate, defensible, and optimized for tax efficiency.

We provide hands-on guidance — from organizing your transaction records and calculating gains/losses to preparing federal and NJ returns that meet every digital asset reporting standard. With new IRS 1099-DA forms rolling out in 2025 and greater state-level scrutiny, now’s the time to get your crypto tax strategy right.

Whether you need help with tax-loss harvesting, wallet reconciliation, or navigating DeFi and NFT reporting, we make it simple to comply — and easy to save where the law allows.

Let’s take the confusion out of crypto taxes and turn compliance into confidence.

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Gregory Monaco, CPA | Livingston NJ (serving NJ + virtual nationwide)