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

irs treats crypto like property, not money. so tax isn’t simply once you cash out to usd. you'll be able to trigger a taxable event if you promote, swap coin to coin, or spend crypto on one thing. yeah… eth to sol could be taxable even when your checking account by no means modified.

the large cut up is holding time. when you held it one yr or less, good points are often taxed like normal revenue (similar brackets as your job). for those who held it multiple yr, it’s often the decrease long-term capital positive factors charges (typically 0% / 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 receive it, and that worth becomes your value basis later. ppl miss this and marvel why their numbers look cursed.

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

reporting clever, trades/features go on type 8949 + schedule d. losses offset positive aspects, and should you’re nonetheless damaging you'll be able to deduct up to $3,000 and carry the remaining ahead.