Decentralized finance (DeFi) has revolutionized the investment world, providing an alternative to traditional financial systems through blockchain technology. However, this innovation comes with certain challenges, particularly in the areas of taxation and regulatory compliance. DeFi users must navigate a complex and ever-changing tax environment while managing the risks associated with these new forms of investment. This article explores the fundamentals of DeFi, the specifics of its taxation, as well as the tax reporting practices that users must comply with.