Investors face tax questions that ordinary wage earners do not: how long to hold, which shares to sell, how to track the cost of assets bought at many different times, and what to do about crypto, funds or accounts held abroad. The rules are well developed for stocks and funds. For digital assets, the IRS has issued guidance and brokers are now sending a new form. This page gives investors in Naperville, Aurora, Chicagoland and other states a map of the main issues.
Capital gains rates for 2025
| Rate | Single | Married filing jointly | Head of household |
|---|---|---|---|
| 0 percent | Up to $48,350 | Up to $96,700 | Up to $64,750 |
| 15 percent | Up to $533,400 | Up to $600,050 | Up to $566,700 |
| 20 percent | Above those amounts | Above those amounts | Above those amounts |
These are taxable income thresholds. Gains on collectibles can reach 28 percent, and unrecaptured section 1250 gain on real estate depreciation reaches 25 percent. Net capital losses offset up to $3,000 of other income a year ($1,500 if married filing separately), and the rest carries forward. Illinois taxes gains at its flat 4.95 percent rate for 2025, so there is no lower state rate for long-term gains. See capital gains and losses and the net investment income tax guide.
Reporting stocks, funds and partnerships
Brokers report sales on Form 1099-B, and you report each sale on Form 8949 and Schedule D. Check that cost basis is right, especially for shares transferred between brokers, inherited shares, reinvested dividends and employer stock. Selling at a loss and repurchasing the same security within 30 days before or after can trigger the wash sale rule, which delays the loss. Mutual fund and ETF distributions are taxable even if reinvested. Partnerships and funds issue Schedule K-1s, which often arrive late, so many investors extend their returns. Estimated tax payments may be necessary if gains are large.
Cryptocurrency and other digital assets
The IRS treats digital assets as property. Form 1040 asks whether during the year you received a digital asset as a reward or payment, or sold, exchanged or otherwise disposed of one. Answer yes if you had any such transaction. Simply holding an asset, or moving it between wallets you control, generally does not create a taxable event.
- Income. Receiving crypto for services, mining, staking, rewards or airdrops tied to a hard fork can produce ordinary income, measured at U.S. dollar value when received. That value becomes your basis.
- Gains and losses. Selling, spending or exchanging crypto for another asset is a disposal. Gain or loss is the proceeds minus your basis, short term if held one year or less. Report it on Form 8949.
- Business activity. Payment for services or sales to customers belongs on Schedule C.
- Gifts. Gifts of digital assets can require Form 709.
Custodial brokers report gross proceeds on Form 1099-DA for transactions on or after January 1, 2025, and basis for certain transactions on or after January 1, 2026. Decentralized or non-custodial brokers are excluded, and some activity such as staking and lending is temporarily exempt from reporting. The absence of a form does not make a transaction non-taxable. Revenue Procedure 2024-28 lets taxpayers allocate unused basis to the units held in each wallet or account as of January 1, 2025, so wallet-by-wallet tracking matters. Keep the date, time, number of units, dollar value and basis for every transaction. Whether the wash sale rule applies to digital assets has been treated differently from stock, so ask before relying on loss harvesting. See the cryptocurrency taxes guide.
The IRS says it does not require registration of digital assets and that letters with a QR code that ask you to register on a compliance portal are scams.
Foreign funds and accounts
Investors who hold foreign mutual funds or ETFs, including many funds in India, may face the passive foreign investment company (PFIC) rules and Form 8621. The FBAR applies when combined foreign accounts exceed $10,000 at any time, and Form 8938 has higher thresholds, starting at $50,000 at year-end or $75,000 any time for single filers living in the U.S. ($100,000 and $150,000 joint). Crypto held at a foreign exchange raises further reporting questions. See PFIC and Indian mutual funds and Form 8938 and India assets.
Planning ideas to review
- Hold appreciated assets longer than one year when it makes sense.
- Harvest losses to offset gains, keeping the wash sale rule in mind.
- Place tax-inefficient investments in retirement accounts.
- Give appreciated assets directly to charity; see charitable giving.
- Time large sales around low-income years and the NIIT thresholds.
- Review Roth conversions in a down market.
How we can help
We reconcile broker and exchange data, correct cost basis, prepare Form 8949, Schedule D and foreign reporting, and plan sales ahead of year-end. See tax planning and individual tax preparation. This page is general information, not advice for your situation.
Frequently asked questions
Do I owe tax when I swap one crypto for another?
Yes, in general. Exchanging one digital asset for another is a disposal, and the gain or loss is calculated in U.S. dollars.
Is staking income taxable?
Generally yes, as income when you receive it, with the value at that time as your basis.
What if my broker reports no cost basis?
You still report the sale and use records to establish basis. Without records, basis may be treated as zero.
Is a transfer between my own wallets taxable?
Generally no, unless you paid a transfer fee in crypto.
Official sources
- IRS: Topic no. 409, Capital gains and losses
- IRS: Digital assets
- IRS: Topic no. 559, Net investment income tax
- IRS: Comparison of Form 8938 and FBAR requirements
- Illinois Department of Revenue: 2025 IL-1040 instructions
This page is a plain-language summary. The official source controls if there is any difference.
General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.