Determining your crypto capital gains tax rate If assets were held for more than a year, the transaction is a long-term trade. The IRS treats long-term gains preferentially, with rates of 0%, 15%, or 20%, depending on your tax bracket. Short-term gains are taxed at your ordinary income tax rate.
How do I keep track of crypto trades for taxes?
The IRS treats cryptocurrency as “property.” If you buy, sell or exchange cryptocurrency, you're likely on the hook for paying crypto taxes. Reporting your crypto activity requires using Form 1040 Schedule D as your crypto tax form to reconcile your capital gains and losses and Form 8949 if necessary.
How do you manually calculate crypto tax?
Your cost basis is the original price you paid for a coin/token, plus any transaction fees. You subtract your cost basis from the price you sold an asset for to calculate your capital gains or losses. You need to calculate your capital gains anytime you sell, swap, or spend crypto (as well as gift in some countries).
How do I report crypto trades on my taxes?
How to Report Crypto on Your Taxes (Step-By-Step)
- Calculate your crypto gains and losses.
- Complete IRS Form 8949.
- Include totals from Form 8949 on Schedule D.
- Include any crypto income.
- Complete the rest of your tax return.
Do you pay taxes on every crypto trade?
Any time you sell or exchange crypto, it's a taxable event. This includes using crypto used to pay for goods or services. In most cases, the IRS taxes cryptocurrencies as an asset and subjects them to long-term or short-term capital gains taxes.
What is the tax rate for short-term crypto?
Short-term capital gains from crypto held under a year are subject to current income tax rates, ranging from 10-37% based on your tax bracket and total income. Long-term capital gains on profits from crypto held over a year have a 0-20% rate. The IRS collects crypto taxes and treats crypto as property.