Are you trying to stay on top of your crypto activity but still feel unsure about how the IRS will treat your transactions in 2026? With crypto becoming more common for investors, traders, and even everyday payments, the tax rules can feel confusing if you don’t know what applies to you.
Whether you bought Bitcoin for the first time or you regularly move crypto assets across exchanges, understanding what counts as taxable and what the IRS expects you to report is necessary. This guide breaks down how crypto taxes work in the USA, what forms you’ll need, and what to watch for across different transaction types so you can file with confidence.
Key Takeaways
- The IRS treats cryptocurrency as property, so buying, selling, or exchanging it creates a taxable event.
- Crypto income from activities like mining, staking, earning rewards or short-term gains are taxed as ordinary income at regular income tax rates.
- Long-term capital gains attracts a different set of capital gains tax rates in the USA.
- You must report your crypto activity using forms such as Form 8949, Schedule D, and Schedule 1 or Schedule C, depending on how you earn it.
Is Bitcoin or Other Cryptocurrency Taxable in the USA?
Yes, the Internal Revenue Service (IRS) treats Bitcoin and other cryptocurrencies as property. Therefore, every time you sell, trade, or spend crypto, the transaction creates a taxable gain or loss. If the value of your crypto increases between the time you acquire it and the time you dispose of it, that profit is subject to Capital Gains Tax. These gains must be reported on Form 8949 and Schedule D.
Moreover, if you are receiving cryptocurrencies as a form of “Income” then that too is subjected to Federal income tax. If you earn crypto through business payments, services, mining, staking, or any activity where crypto is given in exchange for work, it is treated as ordinary income. You must report this income at its fair market value on the day you receive it, and it will be taxed according to your regular income tax rate.
Can the IRS Track My Crypto Transactions?
Yes, the IRS can track your cryptocurrency transactions. Even though crypto operates on decentralized networks, the IRS now uses multiple tools to trace transactions and identify taxpayers who fail to report them.
Exchange Reporting and KYC Data
Legally operating crypto exchanges in the USA must follow strict KYC rules and report user activity to the IRS. Forms like 1099-DA and 1099-MISC provide details on transactions, income, and wallet activity. When needed, exchanges may also supply additional information, including linked wallet addresses. This data allows the IRS to match reported activity with tax returns and flag inconsistencies.
Blockchain Analysis and Third-Party Tools
The IRS works with blockchain analytics companies, including Chainalysis, to monitor blockchain movements in real time. These tools help the agency identify transactions that appear unreported or connected to tax evasion. Through programs like Operation Hidden Treasure, specialized IRS agents are trained to uncover patterns of underreported digital asset activity.
John Doe Summons to Major Exchanges
The IRS has issued John Doe summons to platforms such as Coinbase, Kraken, and Poloniex, requiring them to share information about users who may not have reported their crypto activity. These summons help the IRS uncover both historical and ongoing transactions linked to taxpayers across the country.
How Much Tax Is Applied To Crypto In The US?
The amount of crypto tax you are liable to pay depends on how you earned it, how long you held it, and your total income for the year. The IRS applies different rules for short-term gains, long-term gains, and income earned directly in crypto.
- Short-Term Capital Gains and Crypto Income: If you sell or use crypto after holding it for less than 12 months, or if you earn it through mining, staking, or business activity, it is taxed as ordinary income. The rate can fall anywhere between 10% and 37%, depending on your income bracket and state taxes.
- Long-Term Capital Gains: When you hold crypto for more than 12 months before selling or spending it, your tax rate drops to the long-term capital gains range. This rate varies from 0% to 20%, with the exact percentage based on your income level and state rules.
- NFTs and Collectibles: Certain NFTs may be treated as collectibles, which come with a higher federal tax rate. If an NFT falls under this category, the long-term capital gains rate can be as high as 28%, regardless of your income bracket.
Want to estimate your tax quickly? Try out KoinX’s crypto tax calculator for free and get an instant overview of your potential tax liability.
Want to calculate your crypto taxes in the USA? Use our crypto tax calculator.
Federal Income Tax on Crypto in the USA
The IRS applies federal income tax when you earn cryptocurrency through any activity where tokens are received as compensation, rewards, or benefits. These earnings are taxed at your regular income tax rate based on the fair market value of the crypto at the time you receive it.
Federal Income Tax Rate for 2025-26
For the tax year 2025 (tax due in April 2026), the Federal Income Tax rates are as follows:
Tax Rate | Single | Married filing jointly | Married filing separately | Head of Household |
|---|---|---|---|---|
10% | $0 to $11,925 | $0 to $23,850 | $0 to $11,925 | $0 – $17,000 |
12% | $11,925 to $48,475 | $23,850 to $96,,950 | $11,925 to $48,475 | $17,000 to $64,850 |
22% | $103,350 to $197,300 | $96,950 to $206,700 | $48,475 to $103,350 | $64,850 to $103,350 |
24% | $197,300 to $250,525 | $206,700 to $394,600 | $103,350 to $197,300 | $103,350 to $197,300 |
32% | $250,525 to $626,350 | $394,600 to $501,050 | $197,300 to $250,525 | $197,300 to $250,500 |
35% | $250,525 to $626,350 | $501,050 to $751,600 | $250,525 to $375,800 | $250,500 to $626,350 |
37% | $626,350+ | $751,600+ | $375,800+ | $626,350+ |
Capital Gains Tax on Cryptocurrencies in the USA
Capital gains tax applies when you dispose of your cryptocurrency, meaning you sell it, trade it, or use it in a way that results in a profit. Since the IRS treats crypto as property, any increase in value from the time you acquired it to the time you dispose of it becomes a taxable gain.
How Is Capital Gains Tax Rates Applied on Cryptocurrencies?
Capital gains tax rates on crypto depend on how long you held the asset and how much you earn in a given tax year. These two factors determine whether your gains fall under short-term or long-term tax treatment.
- Short-Term Capital Gains Taxes: If you sell or dispose of your cryptocurrency within a year of acquiring it, the IRS applies short-term capital gains tax. These gains are taxed at the same rate as your ordinary income mentioned above.
- Long-Term Capital Gains Taxes: Crypto held for more than a year qualifies for long-term capital gains tax. These rates are lower than ordinary income tax and vary based on your income level.
Long-Term Capital Gains Tax Rates for 2025-26
The long-term capital gains tax rates for the tax year 2025 (tax due in April 2026) are:
Tax Rate | Single | Married filing jointly | Married filing separately | Head of Household |
15% | $48,350 to $533,400 | $64,750 to $566,700 | $96,701 to $600,050 | $48,350 to $300,00 |
20% | $533,400+ | $566,700+ | $600,050+ | $300,000+ |
Are Cryptocurrency Capital Losses Taxable in the USA?
No, crypto losses are not taxable in the USA. However, they can work in your favor when filing taxes. The IRS allows you to tax-loss harvest your cryptocurrencies to reduce your tax burden. If your cryptocurrency drops in value and you dispose of it at a loss, that loss can be used to offset gains or even lower a portion of your ordinary income.
Using Crypto Losses to Offset Capital Gains
When you incur a loss from selling, trading, or spending crypto, you can use that loss to offset your taxable capital gains. There is no annual limit on how many crypto losses you can apply against gains. Losses from crypto can also offset gains from other assets, including stocks and real estate.
Offsetting Ordinary Income
If your total capital losses exceed your capital gains for the year, the IRS allows you to deduct up to $3,000 of those excess losses against your ordinary income. Any remaining unused losses can be carried forward to future tax years until fully used.
When Losses Cannot Be Claimed?
The IRS has issued a guidance that states that it cannot allow a deduction because a token becomes nearly worthless. If a crypto asset’s value falls below $0.01, you cannot claim a loss unless you actually dispose of it. Losses from assets considered “worthless or abandoned” do not qualify unless a taxable disposal takes place.
Do You Pay Tax on Lost or Stolen Cryptocurrencies in the USA?
Losing access to your crypto or becoming a victim of a scam does not always mean you can claim a tax deduction. The IRS has specific rules for when stolen or lost cryptocurrency qualifies as a deductible loss, and these rules depend heavily on the circumstances.
When Stolen Crypto May Be Deductible?
According to recent IRS guidance, theft losses may be deductible if the loss is connected to a transaction entered into for profit. This means the IRS looks at whether you were investing or participating in crypto with the intent to earn a return. Such criteria includes:
- Losses linked to compromised exchange or wallet accounts
- Losses from phishing attacks that resulted in unauthorized transfers
- Losses from pig-butchering investment scams
- Losses from fraudulent crypto investment schemes
- Losses where the taxpayer can prove intent to earn a profit and provide evidence of theft
When Stolen Crypto Are Non-Deductible?
Not every crypto loss qualifies for a tax deduction. The IRS is strict about what counts as a deductible theft loss, and many common situations do not meet the required criteria. If the loss cannot be linked to a theft related to profit-seeking activity, it will generally not be eligible for deduction.
- Losing access to your wallet or private keys
- Accidentally sending crypto to the wrong wallet address
- Failing to prove that a theft occurred
- Being unable to show that the activity was entered into with an intent to earn a profit
An Overview of Cryptocurrency Taxes in the USA for 2025-26
Here’s how different cryptocurrency transactions attract what types of taxes in the USA:
Crypto Activity / Transaction Type | Tax Treatment |
Buying crypto with USD or fiat | Tax-Free |
Holding crypto | Tax-Free |
Transferring crypto between your own wallets | Tax-Free |
Paying gas or network fees | Capital Gains / Loss |
Crypto-to-crypto trades | Capital Gains Tax |
Selling crypto for USD or fiat | Capital Gains Tax |
Spending crypto on goods or services | Capital Gains Tax |
Mining crypto (as a hobby) | Income Tax |
Mining crypto (as a business) | Income Tax |
Staking rewards | Income Tax |
Airdrops | Income Tax |
Hard fork tokens received | Income Tax |
Soft forks | Tax-Free |
Crypto interest earned | Income Tax |
Receiving crypto as salary or freelance payment | Income Tax |
Gifting crypto | Tax-Free for giver (within limits) |
Receiving crypto gifts | Tax-Free |
Donating crypto to a 501(c)(3) charity | Tax-Deductible |
Margin trading (closing positions) | Capital Gains Tax |
Crypto futures trading | Capital Gains Tax |
How Are Different Cryptocurrency Transactions Taxed In the USA?
Let’s now understand how different crypto transactions attract taxes in the USA:
Buying Crypto with US Dollar (USD) or Other Fiat Currencies
Buying cryptocurrency with USD or any other fiat currency is a tax-free activity in the USA. Since you are not disposing of any asset during the purchase, the IRS does not treat this as a taxable event. However, keep record of this transaction for cost basis purposes.
Example:
If you buy 1 ETH for $2,000 using your debit/credit card, you don’t owe any taxes to the IRS. However, keep a note of your cost basis i.e., $2,000.
Holding Cryptocurrencies (HODL)
Holding cryptocurrency is completely tax-free in the USA. Since you are not selling, trading, or spending your assets, no taxable event occurs, and you do not owe any federal taxes while simply storing your crypto.
Example:
If you buy Bitcoin and hold it for several years without making any transactions, you will not owe any tax during that period.
Transferring Crypto From One Wallet to Another
Transferring crypto between your own wallets is not a taxable event. The IRS only taxes transactions that result in a gain or loss. However, any gas or network fee paid during the transfer is treated as a taxable disposal, since a portion of your crypto is spent to complete the transaction.
Example:
If you move 1 ETH from your Ledger wallet to Trust Wallet and pay a $4 gas fee, that fee counts as a disposal. You must calculate the gain or loss on the portion of ETH used to pay the fee based on its cost basis.
Note: You can use KoinX’s crypto tax calculator to calculate the tax owed. |
Selling Cryptocurrency For Fiat Currencies
Selling your cryptocurrency for fiat money like USD counts as a taxable disposal under IRS rules. You’ll owe capital gains tax if the value of your asset has increased since you acquired it. The gain or loss is calculated by comparing your sale price with your original cost basis.
Example:
You bought 2 Solana (SOL) on Coinbase for $150. Later, you sell them on Kraken for $260. Your taxable capital gain is $110.
Swapping Cryptocurrencies
Swapping one cryptocurrency for another is treated as a taxable disposal in the USA. Even if no cash is involved, the IRS considers the trade a capital gains event. Any profit made from exchanging assets such as altcoins, stablecoins, or NFTs must be calculated and reported.
Example:
If you bought Solana (SOL) for $80. Later swapped it for $120 worth of USDT on Binance. You have a taxable capital gain of $40.
Also Read: How Are Stablecoins Taxed In The USA?
Spending Cryptocurrencies
Spending cryptocurrency counts as a taxable disposal, and the IRS applies capital gains tax based on how the asset’s value has changed since you acquired it. Every purchase made with crypto triggers a gain or loss, even though the industry continues to advocate for a microtransaction exemption below $600, which is not yet active.
Example:
You bought Litecoin (LTC) for $80 and later used it on Binance Pay to purchase a $120 gift card. Your $40 increase in value becomes a taxable capital gain.
Receiving Crypto as Salary or Payment
Receiving cryptocurrency as salary or payment is taxed as ordinary income in the USA. The IRS requires you to report the fair market value of the tokens on the day you receive them, and that amount becomes your cost basis. Any future disposal of the crypto will trigger capital gains tax if its value changes.
Example:
You receive 0.5 Bitcoin (BTC) as payment when Bitcoin is worth $60,000.
Your taxable income = 0.5 × $60,000 = $30,000.
If you later sell it for $70,000, your capital gain = $35,000 – $30,000 = $5,000.
Mining Cryptocurrencies
Mining rewards are taxed as ordinary income when you receive them. The taxation is based on their fair market value in USD. If you later sell these mined tokens, any increase in value is subject to capital gains tax.
Note: Miners operating as a business can also deduct expenses like electricity and equipment. |
Example:
You mine 0.05 BTC when its FMV is $1,500.
You owe income tax on $1,500.
If you later sell it for $1,800, you incur a $300 capital gain.
Staking Cryptocurrencies
Staking rewards are taxed as income when you receive them, based on their fair market value at that moment. If you later sell or swap those rewards, capital gains tax applies. In some cases, such as liquid staking, receiving representative tokens can count as a taxable crypto-to-crypto trade.
Note: As per IRS, staking rewards become taxable only when you have full dominion and control, meaning the staked tokens are unlocked and accessible. |
Example:
You earn 5 Polkadot tokens as staking rewards worth $50 each.
You report $250 as income.
If you later sell them for $70 each, i.e., $350 in total you realize a $100 capital gain.
Crypto Airdrops
Crypto airdrops in the USA are treated as miscellaneous income. The IRS taxes the fair market value of the tokens on the day you receive them, and any later disposal will create a taxable capital gain.
Example:
You receive 200 1INCH tokens worth $700 in an airdrop.
You owe income tax on $700.
If you later sell them for $800, you generate a $100 capital gain.
Crypto Forks
Hard forks create new tokens, and the IRS treats these newly received assets as taxable income based on their fair market value at the time of receipt. When you later sell or trade these tokens, any increase in value is subject to capital gains tax. Soft forks, however, create no new tokens and are not taxable.
Example:
You receive 1 BCH after a BTC hard fork, valued at $200 on the day you receive it, creating $200 in taxable income.
If you later sell that 1 BCH for $500, you generate a $300 capital gain.
Crypto Gifts
Crypto gifts are generally tax-free as long as they stay within the annual exclusion limit of $19,000 per recipient in 2025. Larger gifts may require Form 709, and the lifetime exclusion of $13.99 million applies before any gift tax is owed. Recipients also pay no tax and inherit the donor’s cost basis.
Example:
You give 1 ETH worth $3,000, which stays within the annual limit. The recipient owes no tax and uses your original cost basis when selling the ETH later.
Crypto Donations
Donating cryptocurrency to a qualified 501(c)(3) charity is tax-deductible, and the IRS treats it as a non-cash donation. You can deduct the fair market value (FMV) of the crypto on the day you donate it, though larger gifts may require Form 8283 or even a professional appraisal. Deduction limits depend on the organization, ranging from 20% to 50% of your AGI.
Example:
You donate 0.5 BTC with an FMV of $20,000.
You may deduct $20,000 from your taxable income, subject to AGI limits.
Cryptocurrency Margin Trading
Crypto margin trading is taxed the same way as regular crypto disposals. When you close a margin position, any realized profit is subject to capital gains tax. The applicable rate depends on how long you held the position, with short-term gains taxed at ordinary income rates and long-term gains taxed at reduced long-term rates. Liquidations also count as taxable disposals.
Example:
You open a margin long position worth 2 ETH at $2,000 each (total $4,000).
You close the position when ETH reaches $2,400, making a profit of $800.
This $800 is a taxable capital gain.
Cryptocurrency Future Trading
Crypto futures trading is taxed under capital gains rules in the USA. When you settle a futures contract, any realized profit becomes taxable. Regulated crypto futures follow the 60/40 rule, where 60% of the gain is taxed as long-term and 40% as short-term, no matter how long the position was held.
Example:
You enter a BTC futures trade and realize a gain of $1,000 at settlement. Under the 60/40 rule:
- $600 = long-term capital gain
- $400 = short-term capital gain
Note: This rule applies only to regulated crypto futures contracts. |
Earning Cryptocurrency as Interest
Earning interest on your crypto is treated as taxable income in the USA. The IRS requires you to report the fair market value of any interest received in the year you earn it. If you later sell or trade these interest rewards, the disposal will trigger capital gains tax based on the change in value.
Example:
You earn 50 USDT as interest when each token is worth $1.
You report $50 as income.
Later, you sell the 50 USDT for $60, creating a $10 capital gain.
Also Read: How Are Memecoins Taxed in the USA?
How Are NFTs Taxed in the USA?
NFTs follow the same tax rules as other crypto assets. Every time you buy, sell, or earn income from NFTs, the IRS may apply income or capital gains tax depending on the activity.
- Buying an NFT with cryptocurrency is a taxable disposal of the crypto used
- Selling or trading an NFT is a taxable disposal
- Income from selling NFTs you create may be subject to income tax
- Some NFTs may qualify as collectibles and attract a 28% long-term capital gains rate
Note: The IRS uses a look-through analysis to decide whether an NFT is a collectible. They examine the underlying asset represented by the NFT, such as art, coins, or precious metals, to determine if collectible tax rules apply. |
Overview of NFTs Taxes in the USA
Here’s how IRS taxes NFTs:
NFT Activity | Tax Type |
Buying NFTs with Cryptocurrencies | Capital Gains Tax |
Selling NFTs for Crypto of Fiat Currencies | Capital Gains Tax |
Swapping NFTs for Another NFTs | Capital Gains Tax |
Minting an NFT | Not taxable at mint; taxable upon sale |
Selling an NFT you created (Professional Creator) | Ordinary income + Self-employment tax |
Selling an NFT you created (Hobbyist) | Capital gains tax |
Earning NFT Royalties (Professional) | Ordinary income + Self-employment tax |
Earning NFT Royalties (One-time creator) | Possibly passive income (Schedule E) |
Gas fees for minting NFTs | Deductible business expense if part of a trade or business |
How Are DeFi Activities Taxed in the USA?
DeFi transactions do not have their own IRS rule set, but they are taxed under the same principles that apply to all crypto activity. The tax outcome depends on whether you earn new tokens or dispose of existing assets while interacting with DeFi protocols.
- Capital Gains Tax: Applies when you dispose of assets, such as trading liquidity pool tokens or exiting a pool at a profit.
- Income Tax: Applies when you earn new tokens through staking, liquidity incentives, or protocol rewards.
Overview of DeFi Activities Taxes in the USA
Here’s how IRS taxes DeFi transactions:
DeFi Transaction | Likely Tax Treatment |
Swapping crypto on DEXes | Capital Gains Tax |
Buying crypto with USD on DEX | Not Taxable |
Buying crypto with another crypto | Capital Gains Tax |
Lending crypto (token exchange) | Capital Gains Tax |
Lending crypto (no token issued) | Not Taxable at deposit |
Earning interest via lending (new tokens) | Income Tax |
Earning interest (token value increases only) | Capital Gains Tax |
Borrowing crypto (with a token issued) | Capital Gains Tax |
Borrowing crypto (no token issued) | Not Taxable |
Paying interest in crypto | Capital Gains Tax |
Paying interest in Fiat | Not Taxable |
Receiving staking rewards | Income Tax |
Yield farming (earning new tokens) | Income Tax |
Yield farming (token value increases only) | Capital Gains Tax |
Adding liquidity (token received) | Capital Gains Tax |
Removing liquidity (token returned) | Capital Gains Tax |
Receiving LP rewards (new tokens) | Income Tax |
Receiving LP rewards (value increases) | Capital Gains Tax |
Margin trading / Derivatives | Capital Gains Tax |
Token wrapping/unwrapping | Capital Gains Tax |
Transfer fees paid in crypto | Capital Gains Tax |
Rebase tokens (adjusted supply only) | Not Taxable |
Play-to-earn (earning tokens) | Income Tax |
Play-to-earn (selling/trading rewards) | Capital Gains Tax |
How To Calculate Different Crypto Taxes in the USA?
Calculating your crypto taxes in the USA starts with understanding how income events and disposal events are treated differently. Income-based transactions follow federal income tax rules, while selling or trading assets triggers capital gains tax. Each requires a separate calculation method.
Calculating Federal Income Tax
For any crypto you earn, determine its fair market value (FMV) in USD on the day you receive it. This amount becomes your taxable income.
Taxable Income = Gross Total Income – (Deductions + Exemptions) |
Your federal income tax rate then applies based on your filing status.
Note: Some states may require you to pay State Income Tax, so consider your location’s tax laws. |
Calculating Capital Gains Tax
Start by determining your cost basis, which includes the purchase price plus any transaction fees.
Capital Gain/Loss = Sale Price – Cost Basis |
A positive result means a taxable gain. A negative result counts as a loss, which can offset other gains and reduce your tax liability.
Which Cost Basis Method Is Accepted in the USA?
Determining your cost basis method is essential when you hold multiple units of the same cryptocurrency purchased at different times and prices. The IRS allows several methods under Specific Identification, giving you flexibility as long as you maintain clear records that show which asset was sold.
- Specific Identification (Spec ID): Choose the exact unit you sold, supported by detailed records.
- FIFO: The earliest asset you purchased is treated as the first one you sell.
- LIFO: The most recently purchased asset is treated as sold first.
- HIFO: The highest-priced asset is sold first, often reducing taxable gains.
Note: Starting in 2025, the IRS requires wallet-based cost tracking. You may still use your preferred method within Spec ID, but your transaction records must clearly support the order in which assets were disposed of. |
How To Report Crypto on Taxes in the USA?
Reporting your crypto taxes in the USA involves disclosing both your capital gains activity and any crypto income on your annual tax return. The IRS requires clear documentation of every disposal, along with accurate income reporting when you earn cryptocurrency.
- Answer “yes” to the digital asset question on Form 1040.
- Report all disposals and resulting gains or losses on Form 8949 and Schedule D.
- Report crypto income on Schedule 1 or Schedule C, depending on how you earned it.
Platforms like KoinX can generate IRS compliant, TurboTax ready tax reports for faster and more accurate filing.
What Tax Forms You Need to File to Report Crypto in the USA?
When reporting crypto activity in the USA, you must use the correct IRS forms to declare your gains, losses, and income. Each form serves a specific purpose, whether you’re reporting capital gains, ordinary income, or self-employment earnings from crypto activities. Here’s a table to understand what forms to file to report crypto in the USA:
Form | Purpose |
Form 8949 | Detailed reporting of each crypto gain or loss |
Schedule D | Summarizes total gains/losses for Form 1040 |
Schedule C | Self-employment income from mining, staking, rewards |
Schedule 1 | Miscellaneous crypto income such as airdrops or interest |
1099-MISC | Income of $600+ issued by service providers |
1099-B | Reports sales/disposals of crypto assets |
Note: All taxpayers must answer the IRS digital asset question on Forms 1040 series, even if no crypto activity occurred. |
When To File Crypto on Taxes in the USA?
You must report your crypto activity as part of your annual federal tax return. The standard filing deadline is April 15, unless it falls on a weekend or federal holiday, in which case it moves to the next business day. American expats receive an automatic extension until June 15. Taxpayers may also file for an extension until October 15, but the request must be submitted before the April deadline.
Filing Category | Crypto Tax Deadline |
Standard taxpayers | April 15 |
Deadline falls on a weekend/holiday | Next working day |
American expats | June 15 |
Extended filing deadline | October 15 (must request by April 15) |
What Records to Keep For Crypto Tax Filing in the USA?
You must file your crypto taxes each year during the regular federal tax season, which typically runs from January to April. To file accurately, the IRS requires you to maintain clear and complete records for every crypto transaction you make.
- Dates of all transactions
- Fair market value in USD on purchase and disposal
- Capital gains or losses for each transaction
- Purpose of the transaction and parties involved
- Receipts for buying or selling
- Records from all wallets and exchanges
Keep these records for at least six years, as the IRS can issue crypto audit on your returns from that period.
How Can You Lower Your Crypto Taxes in the USA?
Lowering your crypto taxes in the USA comes down to using legal strategies that reduce your taxable gains or increase your eligible deductions. The IRS allows several methods that can help you manage your tax bill more efficiently.
- Hold long-term: Keeping assets for over 12 months qualifies you for lower long-term capital gains rates.
- Tax-loss harvesting: Realize losses to offset unlimited capital gains and up to $3,000 of ordinary income.
- Use allowances and exemptions: Low-income long-term gains may fall under the 0% bracket.
- Gift or donate crypto: Gifts are tax-free within limits, and donations are tax-deductible.
- Consider IRAs: Bitcoin IRAs allow tax-free long-term growth.
- Choose the right cost-basis method: FIFO, LIFO, HIFO, or Spec ID can significantly change your gains.
How KoinX Can Ease Up Your Crypto Taxes in the USA?
Crypto tax season can feel stressful, especially when you’re juggling transactions across multiple wallets and exchanges. With IRS rules changing each year and every transaction carries its own tax impact. Therefore, even a small error in calculating gains, income, or losses can lead to unexpected tax bills or notices. That’s exactly why KoinX exists. It takes the complexity off your shoulders and turns crypto tax filing into a smooth, accurate, and worry-free experience.
Connect and Sync Effortlessly
KoinX lets you import your entire crypto history in minutes by syncing with 800+ exchanges, wallets, and blockchains. This removes the hassle of manual data entry and ensures every transaction is captured accurately.
IRS-Compliant & TurboTax Ready Tax Reports
The platform automatically applies IRS-accepted cost basis methods such as FIFO, LIFO, HIFO, and Spec ID. It calculates your gains, losses, and income with precision, helping you avoid mistakes that could lead to notices or penalties, thereby generating accurate TurboTax ready tax reports.
Unified View of Your Crypto Activity
KoinX consolidates trades, swaps, rewards, and fees into a single dashboard. This gives you a complete picture of your taxable activity, making it easier to review details before filing your return.
Easy, Audit-Ready Tax Reports
Once your data is synced, KoinX generates clean, ready-to-file IRS tax reports, including Form 8949. These reports can be downloaded and shared directly with your accountant or tax preparer.
Forget stressing over crypto tax! Let KoinX handle all your crypto tax calculations and reporting automatically. Sign-up on KoinX today and manage your taxes on one trusted platform.
Conclusion
Managing crypto taxes in the USA can feel challenging, but staying aware of how different transactions are taxed makes the process far more manageable. Understanding how capital gains, income-based events, staking rewards, and disposals work helps you stay compliant with IRS rules while keeping your tax burden in check.
Since calculating everything manually can be time-consuming, using an automated crypto tax tool like KoinX can make the process easier. It organizes your transactions, calculates taxes accurately, and prepares reports you can file with confidence. Ready to simplify your crypto taxes? Join KoinX today.
Frequently Asked Questions
Do I Pay Taxes On Crypto I Never Sold?
No, you do not pay taxes on crypto you simply buy and hold in the USA. Tax applies only when a taxable event occurs, such as selling, trading, or spending your crypto. However, if you earn crypto through staking, mining, airdrops, or rewards, that income is taxable even if you don’t sell it.
How Much Crypto Can I Cash Out Without Paying Taxes?
Any amount of crypto you cash out is taxable if it results in a gain. There is no minimum threshold that allows you to withdraw tax-free. If the crypto is sold for more than your cost basis, the difference becomes a taxable capital gain
Will the IRS Know If I Don’t Report Crypto?
Yes. The IRS receives data from exchanges through forms like 1099-DA and uses blockchain analytics to trace wallet activity. Failure to report or crypto tax evasion in the USA can result in penalties, interest, or an audit. Even small unreported crypto activity may be flagged.
What Triggers IRS Crypto Audit?
Several factors can trigger an audit such as:
- Unreported or underreported crypto income
- Mismatches between your tax return and exchange-reported data (Form 1099-DA, 1099-MISC)
- Large, high-frequency, or high-value crypto transactions
- Using offshore or non-KYC exchanges
- Wallet activity that appears unusual or high-risk
- Receiving IRS notices such as CP2000, 6173, or 6174-A, which may signal further review
How Long Can I Hold Crypto To Avoid Taxes?
You cannot avoid taxes entirely by holding crypto, but you can lower your rate. If you hold an asset for more than 12 months before selling, it qualifies for the lower long-term capital gains rate. Holding longer reduces your tax burden but does not eliminate taxes completely.
Why Is Reporting Crypto Taxes So Difficult?
Reporting crypto taxes is challenging because traditional tax systems weren’t built for multi-platform, high-volume digital transactions. Investors must track cost basis, calculate gains for every disposal, and record the USD value of all income events. Managing this manually is exhausting, which is why tools like KoinX make accurate reporting much easier.
Why Can’t Crypto Exchanges Provide Accurate Tax Forms?
Exchanges cannot produce complete tax forms because they only see activity on their own platform. Once you move crypto off an exchange, it loses visibility into your cost basis and future disposals. With no shared database across platforms, exchanges can’t track your full history, making accurate tax reporting impossible on their own.
Do I Have to Report Crypto Losses on Taxes?
Yes. Reporting losses is beneficial even when you have no gains. You can deduct up to $3,000 of net losses against ordinary income and carry any remaining losses forward to future years. This helps reduce your tax burden over time and ensures you fully utilise losses from down markets.
Is Converting Crypto a Taxable Event?
Yes. Swapping one cryptocurrency for another counts as a disposal under IRS rules. Any difference between your cost basis and the value at the time of conversion is a capital gain or loss, and must be reported on your tax return like any other taxable crypto transaction.
What’s Form 8300 for Crypto Transactions Over $10,000?
The IRS previously required businesses to report crypto payments over $10,000 using Form 8300. However, enforcement is paused until clearer guidance is issued because crypto’s pseudonymous nature makes gathering required information difficult. Updated regulations are expected, and businesses should watch for new IRS instructions before filing.
How Do You Report NFT Taxes?
NFT taxes follow the same rules as cryptocurrency. You must report sales or swaps on Form 8949 and summarize totals on Schedule D. Income from creating or selling NFTs must be included as additional income. The tax treatment depends on whether the transaction was a disposal or an income-generating event.
Does the FBAR Include Foreign Crypto Exchanges?
Currently, the FBAR only applies to foreign financial accounts holding fiat currency, not crypto. Digital assets on overseas exchanges are not required to be reported under FBAR rules at this time. Proposed regulations may extend FBAR to include crypto accounts in the future, but no final update has been issued yet.
