How US Crypto Taxes Actually Work (and Where People Mess Up)

irs treats crypto like property, not cash. so tax isn’t simply once you money out to usd. you possibly can set off a taxable occasion if you sell, swap coin to coin, or spend crypto on one thing. yeah… eth to sol may be taxable even if your checking account never modified.

the large cut up is holding time. should you held it one yr or much less, positive factors are often taxed like regular revenue (similar brackets as your job). when you held it multiple yr, it’s often the lower long-term capital good points rates (typically zero% / 15% / 20% depending on revenue).

then there’s “earned” crypto. staking rewards, mining, some airdrops, getting paid in crypto… that’s often revenue at the value you obtain it, and that value turns into your value basis later. ppl miss this and marvel why their numbers look cursed.

where ppl get cooked is the “lacking value foundation” after transfers (coinbase can only see what it may well see). the only repair is pulling full csvs + pockets exercise and reconciling it somewhere. There are a number of tools like Koinly Awaken Coinledger i’ve tried a number of, but i truthfully favor Awaken tax for the “multiple wallets + transfers + weird basis gaps” cleanup earlier than submitting.

reporting sensible, trades/positive aspects go on type 8949 + schedule d. losses offset good points, and in the event you’re nonetheless damaging you possibly can deduct up to $three,000 and carry the remaining ahead.