Security - Crypto Tax Calculator (2024)

FAQs

Is crypto taxed as a security? ›

The IRS considers cryptocurrencies “property” rather than currencies. That means they're treated a lot like traditional investments, such as stocks, and can be taxed as either capital gains or as income. Bookmark our full crypto tax guide for a later deep dive.

Crypto Tax Calculator has layers of technical and operational controls such as antivirus, penetration testing and vulnerability scanning to protect all user information. Our application allows you to delete all imported data (and associated wallet/exchange information) at any time for any reason.

The total Capital Gains Tax you owe from trading crypto depends on how much you earn overall every year (i.e. your salary, or total self-employed income plus any other earnings). This number determines how much of your crypto profit is taxed at 10% or 20%. Our capital gains tax rates guide explains this in more detail.

The IRS treats cryptocurrencies as property for tax purposes, which means: You pay taxes on cryptocurrency if you sell or use your crypto in a transaction, and it is worth more than it was when you purchased it. This is because you trigger capital gains or losses if its market value has changed.

There is no way to legally avoid taxes when cashing out cryptocurrency. However, strategies like tax-loss harvesting can help you reduce your tax bill legally.

Yes, you can write off crypto losses on taxes even if you have no gains. If your total capital losses exceed your total capital gains, US taxpayers can deduct the difference as a loss on your tax return, up to $3,000 per year ($1,500 if married filing separately).

US taxpayers must report any profits or losses from trading cryptocurrency and any income earned from activities like mining or staking on tax return forms, such as Form 1040 or 8949. Not reporting can result in fines and penalties as high as $100,000 or more severe consequences, including up to five years in prison.

Short-term capital gains for US taxpayers from crypto held for less than a year are subject to going income tax rates, which range from 10-37% based on tax bracket and income. Long-term capital gains on profits from crypto held for more than a year have a 0-20% rate.

That's right, when you make purchases using crypto, this counts as a taxable event you'll need to report on your tax forms just like selling a stock and using the resulting money to buy something. You'll need to keep track of all these transactions so you can determine your tax liability accurately on your tax return.

Finding your cost basis

This refers to the original value of an asset for tax purposes. In order to calculate crypto capital gains and losses, we need a simple formula: proceeds - cost basis = capital gain or loss. Note that two additional variables may affect your cost basis: accounting method and transaction fees.

Do you have to pay taxes on crypto if you reinvest? ›

When you reinvest your cryptocurrency, you are essentially selling one type of crypto and purchasing another. This is considered a taxable event, even if you do not cash out to fiat currency.

If you're holding crypto, there's no immediate gain or loss, so the crypto is not taxed. Tax is only incurred when you sell the asset, and you subsequently receive either cash or units of another cryptocurrency: At this point, you have “realized” the gains, and you have a taxable event.

In the U.S., crypto is considered a digital asset, and the IRS treats it generally like stocks, bonds, and other capital assets. Like these assets, the money you gain from crypto is taxed at different rates, either as capital gains or as income, depending on how you got your crypto and how long you held on to it.

Similarly, theft losses used to be tax deductible. However, theft losses were also affected by the tax reform. They are now no longer tax deductible. So if you've lost your crypto due to a hack or scam, you cannot claim it as a loss and offset it against your gains.

With relatively few exceptions, current tax rules apply to cryptocurrency transactions in exactly the same way they apply to transactions involving any other type of asset. One simple premise applies: All income is taxable, including income from cryptocurrency transactions.

What is Cryptocurrency Tax Fraud? Tax fraud charges resulting from failure to pay taxes on cryptocurrency earnings are charged under federal tax evasion law.