Yes, cryptocurrency transactions are reported to the IRS. If you sold crypto, received it as payment, mined it, or engaged in other digital asset transactions, you must report them on your federal tax return.

The IRS requires all taxpayers to answer the digital asset question on forms like 1040, 1040-SR, and 1040-NR. If you engaged in any digital asset transactions, you’ll typically check “Yes” and report the income or gains appropriately, often using forms such as Form 8949 and Schedule D.

Cryptocurrencies are treated as property for tax purposes, meaning gains, losses, or income derived from their use are taxable. Even if you hold digital assets without transactions, you’re still required to answer the IRS question, though you may select “No” if no taxable events occurred.

The IRS uses tools like blockchain analysis and third-party reporting from exchanges to ensure compliance. To avoid penalties or audits, report your crypto activity accurately and consult IRS resources or a tax professional for guidance.