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

irs treats crypto like property, not cash. so tax isn’t just if you cash out to usd. you possibly can set off a taxable occasion if you promote, swap coin to coin, or spend crypto on one thing. yeah… eth to sol may be taxable even if your bank account by no means changed.

the large cut up is holding time. for those who held it one yr or much less, good points are often taxed like regular revenue (similar brackets as your job). should you held it multiple yr, it’s often the lower long-term capital positive factors charges (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 worth turns into your value foundation later. ppl miss this and marvel why their numbers look cursed.

the place ppl get cooked is the “lacking value foundation” after transfers (coinbase can only see what it will probably see). the one repair is pulling full csvs + pockets exercise and reconciling it someplace. There are multiple tools like Koinly Awaken Coinledger i’ve tried a number of, however i truthfully favor Awaken tax for the “multiple wallets + transfers + bizarre basis gaps” cleanup earlier than filing.

reporting clever, trades/good points go on type 8949 + schedule d. losses offset positive factors, and for those who’re nonetheless damaging you'll be able to deduct up to $3,000 and carry the remaining forward.