Crypto Tax Calculator
Calculate cryptocurrency taxes including capital gains, ordinary income from mining/staking, and track your crypto transactions with multiple cost basis methods.
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Tax Information
FIFO is IRS default. HIFO minimizes gains.
Transactions
Understanding Crypto Taxes: A Comprehensive Guide
Crypto Tax Essentials: Key Rules & Recordkeeping
According to IRS Notice 2014-211, cryptocurrency is treated as property for tax purposes, not currency. Every disposal creates a taxable event, and meticulous documentation is the only way to substantiate your return.
Top 5 Things to Know About Crypto Taxes
- 1.Every trade is taxable – Trading BTC for ETH triggers capital gains on the BTC
- 2.Mining & staking = ordinary income – Taxed when received at fair market value
- 3.Hold >1 year for better rates – Long-term gains: 0-20% vs short-term: 10-37%
- 4.Keep meticulous records – Must prove cost basis or IRS treats proceeds as 100% gain
- 5.Form 1040 digital asset question – Must answer honestly; lying = perjury
Taxable Events Include:
- ✓Selling crypto for USD – Triggers capital gains/losses
- ✓Trading crypto for crypto – BTC→ETH is a taxable disposal of BTC
- ✓Using crypto to buy goods/services – Paying for coffee with BTC triggers capital gains
- ✓Mining rewards – Ordinary income when coins are received2
- ✓Staking rewards – Ordinary income at fair market value when received2
- ✓Airdrops – Ordinary income if you have dominion and control (IRS Rev. Rul. 2019-24)3
- ✓Interest/yield from lending/DeFi – Ordinary income when received
Non-Taxable Events:
- ○Buying crypto with USD – No tax until you sell
- ○Transferring between your own wallets – Not a sale or exchange
- ○Holding crypto – Only taxed when disposed
- ○Gifting crypto (under $18,000/year per recipient) – Recipient takes your cost basis4
Recordkeeping Checklist
The IRS requires detailed records to substantiate your cost basis and taxable events8. If you can't prove your cost basis, the IRS may treat your entire proceeds as taxable income.
- ☑Transaction history – Date, time, amount, cryptocurrency type
- ☑Purchase/cost basis – How much you paid (including fees) in USD
- ☑Sale proceeds – How much you received (minus fees) in USD
- ☑Fair market value (FMV) – USD value at time of receipt for mining/staking/airdrops
- ☑Wallet addresses – Public addresses for all wallets (hot, cold, exchange)
- ☑Exchange CSV/API exports – Download transaction history from all exchanges
- ☑Conversion rates – USD exchange rate at time of each transaction
- ☑Gas fees – Transaction fees add to cost basis (for buys) or reduce proceeds (for sales)
Retention tip: Keep records for at least 3 years after filing, or 6 years if you underreport income by 25%+. IRS Pub 544 provides detailed recordkeeping guidance.8
Capital Gains vs. Ordinary Income Treatment
The IRS treats crypto income differently based on how you acquired it2:
| Transaction Type | Tax Treatment | Tax Rates | Reporting Form |
|---|---|---|---|
| Sales/Trades (buy & sell) | Capital Gains/Losses | Short-term (≤1 year): 10-37% Long-term (>1 year): 0%, 15%, or 20% | Form 8949 & Schedule D |
| Mining | Ordinary Income | 10-37% (your tax bracket) | Schedule 1 (or Schedule C if business) |
| Staking Rewards | Ordinary Income | 10-37% | Schedule 1 |
| Airdrops | Ordinary Income (if you have control) | 10-37% | Schedule 1 |
| Interest/DeFi Yield | Ordinary Income | 10-37% | Schedule 1 or Schedule B |
⚠️ Important: When you later sell crypto you received as income (mining, staking, airdrops), you trigger a second taxable event – capital gains on the appreciation from the date received.
Example: You mine 1 BTC when it's worth $50,000 (ordinary income). Six months later you sell it for $60,000. You owe ordinary income tax on $50,000 and short-term capital gains tax on $10,000.
Cost Basis & Accounting Methods
Your cost basis is what you paid for the crypto (including fees). When you sell, your gain or loss = proceeds minus cost basis.
IRS-Approved Accounting Methods5:
FIFO (First In, First Out)
Sell the oldest coins first. This is the IRS default if you don't specify a method.6
Best for: Long-term holders who benefit from older, lower-cost coins qualifying for long-term rates.
LIFO (Last In, First Out)
Sell the newest coins first.
Best for: Minimizing gains if recent purchases were at higher prices.
HIFO (Highest In, First Out)
Sell the highest-cost coins first to minimize gains.
Best for: Tax optimization – minimizes taxable gains.
Specific Identification
You specifically identify which coins you're selling (requires meticulous records and documentation at time of sale).
Best for: Maximum control, but requires excellent recordkeeping.
❌ NOT Allowed for Crypto: The IRS does not allow average cost basisfor cryptocurrency (unlike mutual funds). You must use FIFO, LIFO, HIFO, or specific identification.5
Wash Sale Rule (Currently NOT Applicable to Crypto)
Good news (for now): The wash sale rule currently does not apply to cryptocurrency.7
What this means: You can sell crypto at a loss to offset gains (tax-loss harvesting), then immediately rebuy the same crypto without losing the tax benefit.
⚠️ Watch for Changes: Pending legislation may extend wash sale rules to crypto. As of 2024, the rule only applies to stocks and securities, not digital assets. Check IRS guidance and consult a tax professional.7
Tax Reporting Forms for Crypto
Form 1040 – Digital Asset Question
Starting in 2020, the IRS added a question on Form 1040: "At any time during [year], did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?"9
⚠️ You MUST answer this question. Answering "No" when you had crypto activity is perjury.
Form 8949 – Sales and Other Dispositions of Capital Assets
Report every sale, trade, or exchange of crypto. List each transaction with date acquired, date sold, proceeds, cost basis, and gain/loss.10
Schedule D – Capital Gains and Losses
Summarizes totals from Form 8949 and calculates net short-term and long-term capital gains.10
Schedule 1 – Additional Income and Adjustments to Income
Report ordinary income from mining, staking, airdrops, and interest (Line 8: Other income).2
Schedule C – Profit or Loss from Business (if applicable)
If you mine or trade crypto as a business (not as an investor), report income and expenses on Schedule C. You may owe self-employment tax (15.3%).2
Form 1099-MISC / 1099-B / 1099-K
Some exchanges issue 1099 forms for rewards, staking income, or sales. Starting in 2025, new IRS rules require more comprehensive 1099-DA (Digital Asset) reporting from brokers.11
Advanced Topics: DeFi, NFTs, and Airdrops
Tax Planning Strategies
✓ Tax-Loss Harvesting (Currently Allowed)
Sell crypto at a loss to offset gains. Unlike stocks, you can immediately rebuy the same crypto (wash sale rule doesn't apply—yet). Losses offset gains dollar-for-dollar, plus up to $3,000 of ordinary income annually.15
✓ Hold >1 Year for Long-Term Rates
Long-term capital gains (held >365 days) are taxed at 0%, 15%, or 20%—much better than short-term rates of 10-37%.
✓ Use HIFO or Specific ID to Minimize Gains
By selling your highest-cost coins first, you minimize taxable gains (especially useful for tax-loss harvesting).
✓ Gift Crypto Instead of Cash
You can gift up to $18,000/year per recipient (2024 limit) without gift tax. Recipient takes your cost basis, so this works best if they're in a lower tax bracket.
✓ Donate Appreciated Crypto to Charity
Donate crypto held >1 year to a qualified charity. You avoid capital gains tax and get a charitable deduction for the full FMV (up to 30% of AGI).16
✓ Consider Retirement Accounts
Some providers (e.g., iTrustCapital, Bitcoin IRA) allow crypto holdings in self-directed IRAs. Growth is tax-deferred (Traditional IRA) or tax-free (Roth IRA). Check fees and custody risks carefully.
Sources & Further Reading
Need Official IRS Guidance?
Visit the IRS Virtual Currency page for the latest tax guidance, FAQs, and official publications.
Visit IRS Virtual Currency Hub →Disclaimer: This educational content is for informational purposes only and does not constitute legal, tax, or financial advice. Cryptocurrency tax law is complex and evolving. Consult a qualified tax professional or CPA specializing in digital assets for personalized guidance. The author and website assume no liability for decisions made based on this information.
Key Financial Terms
Understand the essential concepts behind this calculator
Capital Gains Tax
Tax on profits from selling investments like stocks, bonds, or real estate.
Cost Basis
The original purchase price of an investment, used to calculate capital gains or losses when you sell.
Taxable Income
Income that's actually taxed after subtracting deductions from AGI. Used to determine tax bracket and total tax owed.
Tax-Loss Harvesting
Selling investments at a loss to offset capital gains or up to $3,000 of ordinary income each year.
Frequently Asked Questions
Common questions about the Crypto Tax Calculator
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⚠️ Important Disclaimer
This Crypto Tax Calculator provides estimates for educational and informational purposes only. Actual results may vary significantly based on individual circumstances, market conditions, regulatory changes, and other factors beyond the scope of this calculator.
The calculations and projections provided are based on assumptions and historical data that may not reflect future performance.Past performance does not guarantee future results.
This tool is not financial advice, tax advice, legal advice, or investment advice. For personalized guidance tailored to your specific situation, please consult with qualified professionals including:
- Certified Financial Planner (CFP)
- Certified Public Accountant (CPA) for tax matters
- Licensed attorney for legal matters
- Registered Investment Advisor (RIA) for investment decisions
Data Accuracy: All data sources, statistics, and rates were verified as accurate as of October 2025. Tax rates, market conditions, and other financial data change over time. Always verify current rates and consult official sources.
No Warranties: While we strive for accuracy, we make no warranties or guarantees regarding the accuracy, completeness, or reliability of any information provided. Use this tool at your own risk.