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

irs treats crypto like property, not cash. so tax isn’t just once you money out to usd. you'll be able to set off a taxable event if you promote, swap coin to coin, or spend crypto on one thing. yeah… eth to sol could be taxable even if your checking account never changed.

the large cut up is holding time. when you held it one yr or much less, features are often taxed like regular revenue (similar brackets as your job). in case you held it multiple yr, it’s often the decrease long-term capital features charges (typically zero% / 15% / 20% relying on revenue).

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

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

reporting clever, trades/positive aspects go on type 8949 + schedule d. losses offset features, and in the event you’re still destructive you'll be able to deduct up to $three,000 and carry the remaining forward.