Calculate capital gains tax on cryptocurrency sales.
Auto-updated · Verified daily against IRS, Fed & Treasury sources
Enter your numbers below
Based on your inputs
ROI: 137.6%
15.0% rate (long-term)
Reality Score:save 3 numbers across housing, debt & cash to see how your full picture holds up (0–100). One calc alone can't tell you that.
Stays in your browser. Never sent to us.
Analyze 3+ calcs to unlock your Financial Picture dashboard (cross-analysis of all your numbers).
This distinction is fundamental to understanding your tax liability. The IRS issued guidance in 2014 (IRS Notice 2014-21) clearly stating: cryptocurrency is property for federal tax purposes. This means capital gains tax applies, not foreign currency exchange rules.
Why does this matter? Because currency exchanges typically have no tax consequences. But treating crypto as property means every transaction is scrutinized:
• Property sales trigger gains/losses: Bitcoin bought at $20k, sold at $50k = $30k capital gain, taxable
• Currency swaps don't: Exchange $1 for €0.92 = no gain or loss, no tax
The moment the IRS declared crypto as property, tax-planning became critical for traders and investors. This is why tracking every transaction with precise cost basis is essential.
Holding period determines your tax rate. It's the single most important variable for minimizing your crypto tax burden.
Short-Term Capital Gains (holding ≤ 1 year): Taxed as ordinary income. Your marginal rate applies (10% to 37% depending on total income and filing status).
Example: Single filer earning $100k salary (22% bracket) realizes $50k short-term crypto gain.
Tax liability: $50,000 × 22% = $11,000
Long-Term Capital Gains (holding > 1 year): Preferential rates apply to all filers.
• $0–$47,025: 0% tax
• $47,026–$518,900: 15% tax
• $518,901+: 20% tax
Same $50k gain, now long-term, same $100k earner: Tax liability = $50,000 × 15% = $7,500. That's $3,500 saved by holding one more year.
The math is stark: for high earners, the difference between short-term (taxed at 37%) and long-term (taxed at 20%) on $100k in gains is:
• Short-term: $37,000 tax
• Long-term: $20,000 tax
• Difference: $17,000 saved
This makes the one-year holding threshold a critical date in your crypto calendar. Mark it. Plan around it.
Cost basis is what you paid for the asset. It determines your gain or loss. Two traders buying the same Bitcoin have different tax consequences if they bought at different prices.
Cost basis = Purchase price + any fees paid to acquire the asset.
Example:
Buy 1 BTC at $25,000 + $50 exchange fee = $25,050 cost basis
Sell at $60,000 = $60,000 proceeds
Capital gain = $60,000 − $25,050 = $34,950
The IRS requires you to calculate gain/loss for every single transaction. Multiple buys, multiple sells, and your cost basis calculation becomes complex. If you bought 1 BTC in 2020 at $10k, 2 more in 2021 at $50k each, and sell 2 BTC in 2024 at $60k—which ones are you selling?
This ambiguity is why cost basis accounting methods matter:
FIFO (First-In, First-Out, IRS default): You're considered selling the oldest coins first. In the example above, selling 2 BTC means selling the 2020 purchase ($10k cost) and one 2021 purchase ($50k cost). Average cost basis = $35k. Gain = $85k.
LIFO (Last-In, First-Out): Sell newest coins first. Selling both 2021 purchases ($100k cost). Gain = $20k. Better for tax purposes but requires IRS approval.
Average Cost: Use average cost of all holdings. 3 BTC cost = ($10k + $50k + $50k) / 3 = $36,667 per BTC. Selling 2 = $73,334 cost basis. Gain = $46,666.
Specific Identification (Best if documented): Choose exactly which coins you're selling. If documented, you can claim you sold the highest-cost coins, minimizing your gain. This requires meticulous record-keeping but gives you control.
The IRS defaults to FIFO if you don't specify. Most traders benefit from LIFO or specific identification. This is critical: poor cost basis tracking can cost you thousands in unnecessary taxes.
Use our crypto tax calculator to estimate your single-transaction gain. For multiple transactions, use crypto tax software (Koinly, CoinTracker, TaxBit) that automatically tracks cost basis.
This is where amateur investors get surprised. Crypto-to-crypto trades ARE taxable events. Swapping Bitcoin for Ethereum is a sale of Bitcoin (capital gains event) followed by a purchase of Ethereum (new cost basis for the Ethereum).
Example of the trap:
You buy 1 BTC at $20,000. Bitcoin spikes to $60,000. You trade it for 10 ETH at $6,000 per ETH (totaling $60k value). No fiat involved. Surely it's not taxable?
Wrong. You've realized a $40,000 capital gain on the Bitcoin. You owe taxes on that $40k, even though no USD hit your bank account. Your cost basis for the ETH is now $60,000.
If ETH drops to $50,000 and you sell, you realize a $10,000 loss on the ETH. Total: +$40k gain (BTC), −$10k loss (ETH) = $30k net taxable gain.
Many traders think"I'll avoid selling coins to dodge taxes" but trading between crypto pairs generates the same tax liability. There's no escape—every value transfer is a taxable event.
Strategy: Tax-loss harvesting becomes critical. If you're going to trade, trade selectively. Swap coins in a loss (lock in the loss for tax purposes) while holding winners. This offsets the gains from the winning trades.
Mining rewards and staking income are treated as ordinary income at the market value when received. This is worse than capital gains because ordinary income is taxed at higher rates.
Mining example:
You mine 0.1 BTC when Bitcoin is $60,000 = $6,000 of ordinary income. This is immediately taxable even though you haven't sold anything. Your cost basis for this BTC is now $6,000.
Later you sell this BTC at $70,000. Gain = $1,000. Total tax: $6,000 ordinary income tax + $1,000 capital gains tax.
The frustration: you're taxed on the BTC when you mine it (fair if you're a business) and again when you sell it (the capital gain). But this is how the IRS structures it.
For high-income earners, mining is particularly unattractive. 0.1 BTC mined at $60k adds $6,000 to your ordinary income, potentially pushing you into the 35-37% bracket. That's $2,100-$2,220 in just mining taxes, before the future capital gains tax.
Staking rewards are similar: taxed as ordinary income when received, then again as capital gains if the staked coin appreciates.
Strategy: Only mine/stake if you believe the appreciation will exceed the ordinary income tax. If you earn $6k in staking rewards at 37% tax rate ($2,220 cost), the staked coins need to appreciate 3.7% just to break even against the tax cost.
Strategy 1: Hold past one year when possible. The difference between short-term (37%) and long-term (20%) rates is 17%. On $100k gains, that's $17k. If your timeline allows, wait.
Strategy 2: Tax-loss harvesting. Sell losing positions to offset winning positions. If you're down $10k on one coin and up $30k on another, sell the loser for a $10k loss, locking in that deduction. Your net gain drops to $20k. You now own neither coin and can—30 days later—rebuy them (no wash-sale rule in crypto, yet).
Strategy 3: Donate appreciated crypto directly. Instead of selling appreciated crypto (taxable) and donating the cash, donate the crypto directly to a qualified charity. You get a deduction for the full appreciated value and pay zero capital gains tax. This works up to 20-30% of your adjusted gross income.
Example: 1 BTC bought at $20k, now worth $60k. If you sell, you owe $6k-$8k in capital gains tax (at 15-20% rate). Donate it instead: $60k charitable deduction, zero capital gains tax. If you're in the 37% bracket, that $60k deduction saves $22,200 in income taxes. Net: you gave $60k to charity and saved $22.2k in taxes.
Strategy 4: Realize gains in low-income years. If you're taking a sabbatical, starting a business, or between jobs, you might be in a 22% or even 12% bracket. Realize gains then instead of in high-income years.
Strategy 5: Use self-directed IRAs or Solo 401(k)s. If you're self-employed, a solo 401(k) allows up to $69k annual contributions (2024). Crypto purchased inside an IRA grows tax-deferred. This requires specialized custody (not all IRA custodians allow crypto), but it shelters gains from taxation until withdrawal.
Use our capital gains tax calculator to see your liability by filing status and income level.
No. Only actual sales, trades, or spending trigger taxes. Holding Bitcoin worth $100k profit (unrealized) is not taxable until you sell or trade it. However, some states are exploring unrealized gains taxes; check your state's rules.
A loss of access is not a tax loss. You can't claim a deduction for inaccessible crypto. The IRS views this as still owned, just inaccessible. This is why secure backup of keys is important for both security and tax purposes.
Yes. The IRS requires reporting all capital gains, even small ones, on Form 8949. No minimum threshold exists. Failing to report is considered tax fraud.
You can't avoid it—excess losses carry forward to future years indefinitely. If you realize $10k in losses, you can deduct $3k this year and $3k per year for the next 2+ years. This is why tax-loss harvesting is a multi-year strategy.
No. Crypto losses offset all capital gains (stocks, real estate, etc.) and then ordinary income (up to $3k/year). There's no"silo" for crypto losses—they apply to your entire capital gains picture.
Day traders occupy the worst tax position in crypto. Every trade—every single one—is a capital gains event. A day trader with 20 trades per day generates 20 separate capital gains (or loss) transactions. All are short-term because the holding period is minutes or hours, not days.
Short-term capital gains are taxed as ordinary income: 10-37% depending on income level. For a high-income trader, this means keeping only 63 cents on every dollar of profit.
Example of the tax burden:
Day trader makes $500k in trading profits from 1,000 trades over the year. Assuming average trade profit is $500 and only 40% hit (60% are losses or minimal gains), taxes at 37% rate = $185,000 owed.
That's 37% of gross profit. Compare this to a buy-and-hold investor with the same $500k profit, held for 2+ years, taxed at 15% (long-term rate) = $75,000. The day trader pays $110,000 MORE in taxes.
This tax drag is why most successful day traders either:
1. Move to low-tax jurisdictions (Singapore, UAE, Malta, El Salvador)
2. Structure through corporate entities (offshore LLCs or trading companies)
3. Combine day trading with systematic loss harvesting (covered below)
4. Realize only long-term gains (buy dips, sell spikes, but hold >1 year)
Stock traders are constrained by wash-sale rules: if you sell a security at a loss, you can't repurchase substantially identical securities within 30 days before or after, or the loss is disallowed.
Crypto wash-sale rules do NOT currently exist. This is a loophole—arguably temporary—that day traders can exploit.
How this helps day traders:
You buy Bitcoin at $50k. It drops to $45k. You want to lock in the loss ($5k loss = $1,850 tax benefit at 37% rate). But you're bullish long-term, so you want to maintain exposure.
Stocks: You can't sell at $45k and immediately rebuy. You may want to wait 30 days. During that time, Bitcoin might rally to $60k, and you missed the upside.
Crypto: You sell at $45k (realize the $5k loss), immediately buy back at $45k the same day. You've locked in a $5k tax loss while maintaining full price exposure. When it rallies to $60k, you're still positioned.
This is tax-loss harvesting with zero downside. The IRS may close this loophole in the future, but currently it's legal.
Strategy for day traders: Maintain a portfolio of carefully selected coins—perhaps 5-10 positions—that are in underwater relative to your entry price. When you have winning trades that day, immediately sell one of your losing positions to realize a loss, offsetting the day's gains. By day's end, you've netted smaller taxable gains.
Approach 1: Account segregation by holding period
Use separate brokerage accounts to visually separate short-term and long-term holdings. This doesn't change taxes, but it prevents accidentally selling a long-term position when you meant to sell a short-term one. A single mistake can cost thousands in unnecessarily paid taxes.
Approach 2: The hybrid strategy—day trade AND invest
Use a percentage of capital for active day trading (accept 37% tax rate) and allocate the rest to buy-and-hold long-term positions (15% tax rate). This splits your risk and tax exposure.
Example: $200k capital. Allocate $100k to day trading, $100k to long-term holds.
• Day trading: $50k profit in 2024, taxed at 37% = $18,500 tax
• Long-term holds: $50k profit held 1+ years, taxed at 15% = $7,500 tax
• Total tax: $26,000 on $100k profit = 26% blended rate
• Vs. all day trading: $37,000 tax = 37% rate
You reduce effective tax rate by 11 points just by allocating some capital to long-term positions.
Approach 3: Legal entity structure (Trader Status investigation)
If you meet IRS Trader Status criteria (substantiality, regularity, profit motive), you can deduct trading expenses on Schedule C instead of Schedule D. This allows deduction of:
• Trading software subscriptions
• Exchange fees (though these reduce gains anyway)
• Professional development (courses, books)
• Trading computer hardware
• Office space allocation
For a day trader with $1M in trading volume annually (at 0.1% fees = $1k in exchange fees) plus $5k in software and equipment, that's $6k in deductible expenses. At 37% tax rate, that's $2,220 in tax savings—not huge, but real.
Note: IRS Trader Status is difficult to establish and crypto is specifically excluded in most guidance. This approach is risky without careful documentation and professional tax guidance.
Approach 4: Offshore corporate structure
Some traders form holding companies in low-tax jurisdictions (Singapore, Dubai, Malta) and trade through those entities. The company keeps profits offshore, taxed at corporate rates (10-17% in these jurisdictions) vs personal rates (37%). When profits are distributed as dividends, they're taxed again (but at more favorable rates, sometimes).
This is legal but complex, expensive to set up (~$3k-$10k initial cost), requires hiring a tax accountant familiar with international crypto law, and creates IRS reporting burdens (FBAR, FATCA forms). Only worth pursuing if you're trading >$2M annually.
Day traders should calculate their true take-home profit, not gross profit.
Scenario: Day trader aims for $100k profit
To net $100k after taxes at 37% rate, you need $158,730 in gross profit ($158,730 × 63% = $100,000 after tax).
To net $100k after taxes with a 26% blended rate (hybrid strategy), you need $135,135 in gross profit ($135,135 × 74% = $100,000).
The hybrid saves you $23,595 in gross trading performance needed to reach the same take-home—that's 16% more easy to achieve.
This is why many successful traders adopt the hybrid. They realize that day trading is so tax-inefficient that the required trading skill and capital are nearly as high as portfolio management, but with lower odds of success.
The IRS closely scrutinizes high-volume traders. If you report unusual trading volumes (1,000+ trades/year) or massive short-term gains, you'll likely be audited eventually.
Audit defense depends entirely on documentation:
• Per-transaction records: Date, time, asset, quantity, price, fees for every single trade. Crypto tax software (Koinly) automates this if you connect exchange APIs.
• Cost basis documentation: Your calculation methodology (FIFO, LIFO, specific ID) and how you applied it.
• Loss harvesting records: Which losing trades you used to offset which winning trades.
• Economic substance: Evidence of profit motive (trading plans, research notes, education). If audited, the IRS will ask:"Is this really trading or just gambling?" Documentation proves it's intentional business activity.
Without documentation, an audit can result in:
• IRS reclassifying all trades as"wash sales" (denied losses)
• Applying the statute of limitations to reassess all years (back to 3-6 years)
• Imposing penalties for negligence or fraud
A single audit can cost $50k+ in back taxes plus penalties and interest. Documentation is cheap insurance. Use crypto tax software that exports reports the IRS understands.
No, if you have documentation of profit motive and activity intent. Gambling losses aren't deductible. Trading losses are. The distinction hinges on showing you're engaged in the business of trading (regular activity, profit motive, substantiality), not speculating casually. Document your process, and you're fine.
Technically yes, though the IRS has enforcement capacity for high-volume traders. IRS Form 8949 requires listing of all sales with cost basis and gain/loss. For 1,000+ trades, this is typically done via cryptocurrency tax software that generates reports for your tax preparer.
You still owe taxes. Small exchanges and offshore platforms (Binance, Kraken) don't file 1099 forms directly to the IRS (this is changing in 2025-2026). You may want to self-report. The IRS increasingly cross-references exchange data via third-party information returns, so self-reporting is critical for audit defense.
Capital losses offset capital gains first, then up to $3,000 of ordinary income per year. Excess losses carry forward indefinitely. So yes, but with limits.
Tax-loss harvesting is intentionally realizing losses to claim tax deductions. Counterintuitively, this is good—losses generate refunds or reduce taxes owed.
Here's the basic mechanism: when you sell an asset at a loss, you can use that loss to offset capital gains from other sales (and other types of property). When losses exceed gains, you can deduct up to $3,000 of net losses against ordinary income (wages, salary, business income). Excess losses carry forward to future years.
Why this matters: Without harvesting, a portfolio down $20k simply sits there unrealized. With harvesting, you realize the loss, claim a $3,000 deduction (saving $1,110 in taxes at 37% rate), and carry forward the remaining $17k loss to future years (saving $6,290 in future taxes). Over 6 years, you recapture $18,400 in tax value from a $20k loss. The loss"pays for itself" via tax savings.
Tax losses operate in a hierarchy:
Step 1: Offset long-term capital gains
Any long-term losses offset long-term gains first. A $10k long-term loss washes out a $10k long-term gain.
Step 2: Offset short-term capital gains
Remaining losses offset short-term gains next.
Step 3: Offset ordinary income (up to $3,000/year)
If losses exceed gains, the next $3,000 of net loss offsets ordinary income (wages, salary, etc.).
Step 4: Carryforward remaining losses
Losses exceeding the $3k ordinary income offset carry forward indefinitely to future years, repeating the hierarchy.
Example of the hierarchy:**
You realize: $5k short-term loss, $8k long-term gain, $12k short-term gain, $50k salary income
Netting: ST loss ($5k) − ST gain ($12k) = net ST loss of $0 (since we have both, we net first)
Actually: $12k ST gain − $5k ST loss = $7k net ST gain
Add: $8k LT gain
Total capital gain: $15k
You can deduct $3k against ordinary income. You have $12k in net capital gains (not $15k because of netting within gain/loss categories). Tax owed on $12k at appropriate rates.
Without the $5k loss harvest, you'd owe on $20k in gains. The harvest saved you tax on $5k of gains = $1,850 at 37% rate (or $750-$3k depending on the rate applicable to that portion).
This is where crypto tax harvesting is dramatically more powerful than stock harvesting.
Stocks are subject to the"wash-sale rule": if you sell a stock at a loss, you cannot repurchase that same stock (or substantially identical shares) within 30 days before or after the sale. If you do, the loss is disallowed, and you don't get the tax deduction.
Congress is considering extending wash-sale rules to crypto, but as of 2025, they do not apply. This means you can:
1. Sell Bitcoin at a loss ($5k loss)
2. Immediately buy Bitcoin back at the same price
3. Claim the $5k loss deduction
4. Maintain full price exposure to Bitcoin
From a tax perspective, you've captured a deduction with zero economic consequence. This is why crypto tax-loss harvesting is so powerful.
Example of the no-wash-sale advantage:**
You bought 1 BTC at $50k. It's now worth $45k. It's December 15th.
Stock scenario: You want to harvest the $5k loss but stay bullish on the asset. You can't sell and immediately rebuy. You may want to either (a) accept a 30-day gap with no exposure, or (b) buy a"substantially identical" alternative like a Bitcoin ETF fund, which is questionable legally.
Crypto scenario: You sell 1 BTC at $45k (realize $5k loss). You immediately buy 1 BTC at $45k. You've locked in a $5k deduction, maintained full price exposure, and faced zero risk. This is why crypto traders aggressively harvest losses.
Strategy 1: Quarterly Portfolio Review
Every quarter, review your crypto portfolio for underwater positions. Identify coins/tokens that are below your cost basis.
Create a"harvesting list": coins down >5% where realizing the loss is strategically sound. Don't harvest ALL losses indiscriminately—some losses might reverse, or you might want to hold for long-term treatment later.
Strategy 2: Offset Your Own Gains (If You Trade)
If you're an active trader with realized gains, harvest losses from concurrent losers to directly offset those gains.
Example: You realize $20k in short-term trading gains from a winning position. Simultaneously harvest $20k in losses from losers. Net capital gain: $0. Tax owed: $0. You've moved money around but avoided taxes.
This is particularly powerful for day traders who can harvest multiple times daily if they have underwater positions.
Strategy 3: Bank Losses for Future Gains
If you don't have current gains to offset, harvest losses and carry them forward. This"banks" a deduction for future years when you'll inevitably realize gains.
Someone who hasn't traded but holds Bitcoin long-term can harvest losses from losing altcoins in their portfolio, carrying those losses forward to offset future Bitcoin gains (when they finally sell Bitcoin at a profit years later).
Strategy 4: Year-End Harvest Surge
December is tax-harvesting month. Aggressively harvest all underwater positions in late December to maximize the current year's deductions. You can even harvest strategic positions that recovered—if you think they'll decline again (and you can rebuy), harvest now.
The urgency: December 31 is the cutoff. Trades must settle by December 31 to count for the current tax year (for crypto, settlement is typically same-day or T+1).
Sophisticated investors use"paired positions" to harvest losses while maintaining correlated exposure.
Example: Bitcoin vs Ethereum
You own 1 BTC and 10 ETH, worth $60k and $20k respectively ($80k total). Both are down from peaks.
You want to harvest losses in BTC (down $5k) but remain exposed to"Bitcoin risk." You sell 1 BTC at the loss, then immediately buy $60k of Ethereum. You've:
• Locked in a $5k deduction
• Maintained exposure to"large-cap crypto" (BTC and ETH are highly correlated)
• Shifted position from BTC to ETH (maybe you prefer Ethereum fundamentals now)
This is tax-loss harvesting with a strategic rebalancing benefit.
Scenario: Portfolio down $100k in 2024 crypto bear market
Your portfolio is worth $900k (down from $1M entry). You have $100k in unrealized losses across various coins.
Without harvesting: $100k loss sits unrealized. No tax benefit. You're just down $100k.
With aggressive harvesting in December:
• Realize $100k in losses
• Use $100k loss to offset $100k in prior-year capital gains (assuming you had gains from 2024 trades)
• If no prior gains, deduct $3k against ordinary income in 2024, carry forward $97k to 2025
• In 2025, deduct another $3k, carry forward $94k to 2026
• Repeat yearly until the $100k loss is fully deducted (over 33+ years)
Tax savings: If $100k loss is deducted against ordinary income at 37% rate, total savings = $37k. If spread over 33 years at 3k/year, you save $1,110/year for 33 years = $37k total. In present value (assuming you're still in the 37% bracket), that's a $37k refund on a $100k loss.
The loss turned a $100k portfolio loss into a $37k tax refund (present value). That's powerful.
No. Without wash-sale rules, you can harvest a loss in Bitcoin and immediately buy Ethereum. As long as they're not"substantially identical" (and crypto assets are treated as unique), you're fine. You can even harvest and hold cash if you're bearish.
Anytime, but December is strategic (year-end loss realization for current-year deduction). Also, harvest after sharp drops (buying opportunities). A -40% crash is peak harvesting season.
No. Once you realize a loss (sell the asset), that specific loss is claimed once. You can't sell, rebuy, and harvest again. The"rebuy" establishes a new cost basis, so only future losses on the new position count as new harvests.
That's expected. You harvest the loss, lock in a deduction, then buy back at the same (or higher) price. If prices rise, you'll have a gain on the rebound—that's a new position with new cost basis. The harvested loss and the new gain are separate tax events. Net result: you paid $X in taxes for the rebound gain but saved $X (or more) in deductions from the harvest. You're typically neutral or ahead.
No. Losses in tax-advantaged accounts (Roth IRA, Traditional IRA, 401k) are never deductible. You can't harvest losses inside these accounts; the accounts themselves shield both gains AND losses from tax consequences. Harvesting only works in taxable accounts.
Long-term (>1 year): 0%, 15%, or 20% based on income. Short-term (≤1 year): your ordinary income rate (10-37%). State taxes may apply too.
No — unrealized gains are not taxed. But crypto-to-crypto trades ARE taxable. Selling BTC for ETH triggers capital gains tax.
Selling for fiat, trading crypto-to-crypto, spending crypto, receiving mining/staking rewards, earning crypto as income. NFT sales are also taxable.
Yes — crypto losses can offset crypto gains and other capital gains. Up to $3,000 of net losses can offset ordinary income annually. Losses carry forward.
Every transaction: date, amount, price in USD at time of transaction, fees, and wallet addresses. Exchanges provide 1099 forms. Use crypto tax software.
Airdrops are taxed as ordinary income at fair market value when received. Hard fork tokens are taxed when you gain dominion and control over them. Both establish a new cost basis at the received value.
Yes. The IRS requires reporting all crypto transactions regardless of profit or loss. Reporting losses is beneficial because they can offset gains and reduce your overall tax liability by up to $3,000 per year.
Report crypto capital gains and losses on Form 8949 and Schedule D. Crypto received as income is reported on Schedule 1 or Schedule C for self-employment. The IRS added a crypto question to the front page of Form 1040.
Buying, selling, and trading NFTs are taxable events similar to other crypto assets. Creating and selling an NFT is taxed as ordinary income. The IRS may classify some NFTs as collectibles subject to a higher 28 percent long-term capital gains rate.
The IRS receives transaction data from exchanges and can assess penalties of 20 to 75 percent of unpaid taxes plus interest. Willful tax evasion can result in criminal charges with fines up to $250,000 and imprisonment.
Crypto = Property for tax purposes (IRS Notice 2014-21)
Short-term (≤1yr): ordinary income. Long-term (1yr+): 0/15/20%
Every formula on this page traces to a federal agency, central bank, or peer-reviewed institution. We cite the rule-makers, not secondhand blogs.
Found an error in a formula or source? Report it →
Result: LTCG 15% → $5,250 tax. Net $29,750
IRS Notice 2014-21: crypto is property. >1 yr hold = LT rates. At $80K income, in 15% LTCG bracket (applies $47,025–$518,900 single 2024). Report on Form 8949 + Schedule D.
Result: $15K short-term gain if ETH held <1yr (+ ordinary rate)
Crypto-to-crypto swap is a disposition (Rev. Rul. 2019-24). You realize gain on ETH AT THE MOMENT of swap, regardless of whether you touched USD. New SOL basis = $25K.
Result: $3K ordinary income → ~$660 tax (22% bracket)
Rev. Rul. 2023-14: staking rewards are ordinary income when you gain dominion/control. Reports on Schedule 1 Line 8v. Basis for staked coins = $3K; future appreciation is capital gain.
Result: $10K capital loss locked in — still holding BTC, $3K offsets ordinary income, $7K carries forward
Wash-sale rule (IRC §1091) applies to securities — crypto is property, so not covered (as of 2024). Can sell and rebuy immediately to harvest loss. Congress has proposed extending §1091 to crypto; may disappear soon.
Every swap is taxable, even without fiat. IRS gets data from major exchanges (Form 1099-DA starting 2025). Use Koinly/CoinTracker/TaxBit.
Impact: Underreporting can trigger 20% accuracy penalty + back taxes + interest. Criminal charges for willful evasion.
Pick FIFO, LIFO, HIFO, or Specific ID — apply consistently. Specific ID requires contemporaneous records (wallet + timestamp + amount).
Impact: FIFO vs HIFO on $100K sale can differ by $5K–$15K in tax.
Page 1 of Form 1040 asks about digital assets. Answering "No" when you transacted = perjury.
Impact: Automatic audit flag; criminal liability exposure.
IRS Notice 2023-27: some NFTs are §408(m) "collectibles" taxed at 28% max LTCG rate, not 20%.
Impact: Art/profile NFTs might face 28% LTCG instead of expected 15–20% — $8K extra tax per $100K gain.
Long-term capital gains (held >1 year) taxed at 0% / 15% / 20% based on taxable income. Short-term (held ≤1 year) taxed as ordinary income. NIIT of 3.8% applies above $200K single / $250K MFJ. Source: IRS Pub 550; IRC §1(h).
| Rate | Single | Married Filing Jointly |
|---|---|---|
| 0% | $0–$47,025 | $0–$94,050 |
| 15% | $47,025–$518,900 | $94,050–$583,750 |
| 20% | $518,900+ | $583,750+ |
LTCG thresholds adjusted for inflation. NIIT thresholds unchanged since 2013 (not indexed). Source: IRS Rev. Proc. 2022-38.
| Rate | Single | Married Filing Jointly |
|---|---|---|
| 0% | $0–$44,625 | $0–$89,250 |
| 15% | $44,625–$492,300 | $89,250–$553,850 |
| 20% | $492,300+ | $553,850+ |
Standard LTCG structure. IRS began emphasizing crypto reporting via Form 1040 question. Source: IRS Rev. Proc. 2021-45; Notice 2014-21.
LTCG thresholds: 0% to $40,400 single / $80,800 MFJ. Source: IRS Rev. Proc. 2020-45.
0% LTCG bracket applied up to $40,000 single / $80,000 MFJ. Source: IRS Rev. Proc. 2019-44.
Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.