The 3 most common US crypto tax questions

With another US tax season in full swing, many crypto users are wondering:

  1. Do I need to pay taxes on my crypto?
  2. What tax rates can I expect?
  3. Are crypto taxes complicated?

Here are some insights to help you navigate your crypto taxes.

Do I need to pay taxes on my crypto?

That depends on how you used it. The most common taxable events everyday users of crypto will face are (1) selling crypto to dollars and recognizing a gain or (2) trading one cryptocurrency for another and recognizing a gain.

For example, if you buy $100 worth of crypto and sell that same amount later for $150, you would need to report and pay taxes on the profit of $50. If your sale results in a loss, you can claim a deduction on your taxes.

A crypto-to-crypto trade also counts as a taxable event. Think of a crypto-to-crypto trade as selling the crypto you’re swapping with and buying the new one at its current value in USD. When trading crypto-to-crypto, you must track your gains and losses in USD to ensure accurate tax reporting.

Simply buying crypto with USD is not a taxable event. You can buy and hold, even as the value rises, without triggering a taxable event. Here’s a look at a few other tax scenarios:

What tax rates can I expect?

When you buy and sell (or trade) crypto within a one-year window, your gains are subject to short-term capital gains tax. Think of this as ordinary income taxed at the 2022 rates.


If your buy and sell window extends beyond a year, your gains are subject to long-term capital gains tax at either 0%, 15%, or 20% based on your income level and filing status.

Are crypto taxes complicated?

When it comes down to it, the main tasks are:

  1. Calculating crypto gains and losses from your sales and trades.
  2. Filling in Form 8948 and Schedule D (Form 1040 — Capital Gains and Losses).
  3. Adding other crypto income (such as rewards earnings) to your filing.

That said, keeping track of transactions manually can be a hassle, if not overwhelming.

If you’re looking for a solution to help automate your portfolio tracking, combine transaction histories across crypto services, and make your transactions searchable, consider using our partner, CoinTracker.

This tax season, CoinTracker is helping users process their first 500 transactions for free using their leading crypto tax software. Check out our recent announcement of our new Tax Center and partnership with CoinTracker to learn more.


This post is for informational purposes only and should not be interpreted or relied upon as financial, legal, or tax advice. This content also only addresses U.S. federal income tax consequences for U.S. citizens and residents and does not address tax consequences that may be relevant to a particular person subject to special rules, such as dealers or traders. You should consult with your own financial, legal, or tax professionals to report and file your crypto taxes or make decisions on your particular circumstances. The laws, regulations, or interpretation of the existing laws could change, which may adversely affect either prospectively or retroactively. The content of this post is subject to changes.


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