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US crypto investors must file their 2024 tax returns by April 15, 2025, ensuring all crypto transactions are accurately reported to the IRS.<\/p>\n<\/li>\n
Crypto held for less than a year is taxed as ordinary income (10%-37%), while holdings over a year qualify for lower capital gains rates (0%, 15%, or 20%).<\/p>\n<\/li>\n
Selling, trading, or spending crypto triggers taxes, while holding or transferring between wallets does not.<\/p>\n<\/li>\n
Mining, staking, airdrops, and crypto payments are taxed as income at applicable rates.<\/p>\n<\/li>\n<\/ul>\n
The world of cryptocurrencies can indeed be an exciting space for investors, but as the tax season approaches, many US investors find themselves grappling with confusion and uncertainty. <\/p>\n
With the upcoming tax filing deadline of April 15, 2025, it’s a critical time to get a handle on crypto tax obligations. Ask most US crypto investors, and they’ll likely tell you that figuring out what transactions trigger a taxable event feels like navigating a maze.<\/p>\n
Understanding various aspects of tax filing<\/a> is crucial for accurately filing taxes, avoiding penalties and staying compliant with the Internal Revenue Service (IRS). This article breaks down key elements like tax brackets, rates, exemptions and other critical details. <\/p>\n The Internal Revenue Service, the agency responsible for collecting US federal taxes, treats cryptocurrencies as property for tax purposes. You pay taxes on gains realized when selling, trading or disposing of cryptocurrencies. For short-term capital gains (held less than a year), you pay taxes at the rates of 10%–37%, depending on your income bracket. <\/p>\n Long-term capital gains (assets held for over a year) benefit from reduced rates of 0%, 15% or 20%, also based on your taxable income.<\/p>\n When you dispose of cryptocurrency for more than its purchase price, you generate a capital gain. Conversely, selling below the purchase price results in a capital loss. You must report both your capital gains and losses<\/a> for the year in which the transaction occurs, with gains being taxable and losses potentially offsetting gains to reduce your tax liability. <\/p>\n With the upcoming April 15, 2025, deadline for filing 2024 tax returns<\/a>, US crypto investors need to ensure these transactions are accurately tracked and reported.<\/p>\n To illustrate, suppose you purchased Ether (ETH<\/a>) worth $1,000 in 2023 and sold it after a year in 2024 for $1,200, netting a $200 profit. The IRS would tax that $200 as a long-term capital gain, applying the appropriate rate based on your 2024 income.<\/p>\n Taxes are categorized as capital gains tax or income tax, depending on the type of transactions:<\/p>\n Capital gains tax:<\/strong> Applies to selling crypto, using crypto to purchase goods or services, or trading one cryptocurrency for another.<\/p>\n<\/li>\n Income tax:<\/strong> Applies to crypto earned through mining<\/a>, staking<\/a>, receiving it as payment for work, or referral bonuses from exchanges.<\/p>\n<\/li>\n<\/ul>\n These distinctions are crucial for accurate reporting by the April 15 deadline. Gains are taxed, while losses can help offset taxable income, so detailed record-keeping is a must.<\/p>\n Did you know? <\/strong><\/em>In Australia, gifting cryptocurrency triggers a capital gains tax (CGT) event. The giver may need to report gains or losses based on the asset’s market value at the time of transfer, though certain gifts — like those between spouses — may qualify for exemptions. While this differs from US rules, it highlights how crypto taxation varies globally.<\/em><\/p>\n In the US, your crypto tax rate depends on your income and how long you’ve held the cryptocurrency. Long-term capital gains tax rates range from 0% to 20%, and short-term rates align with ordinary income tax rates of 10%–37%. Transferring crypto between your own wallets or selling it at a loss doesn’t trigger a tax liability.<\/p>\n You only owe taxes when you sell your crypto, whether for cash or for any other cryptocurrency. Consider this example: Suppose you bought crypto for $1,000 in 2024, and by 2025, its value rose to $2,000. If you don’t sell, no tax is due — unrealized gains aren’t taxable.<\/p>\n If you sell cryptocurrency after holding it for a year or less, your profits are subject to short-term capital gains tax. These gains are taxed as ordinary income, meaning they are added to your total taxable earnings for the year. <\/p>\n Tax rates are progressive, based on income brackets, so different portions of your income are taxed at different rates. For instance, a single filer in 2025 pays 10% on the first $11,000 of taxable income and 12% on income up to $44,725. Short-term rates are higher than long-term rates, so timing your sales can significantly impact your tax bill.<\/p>\n If you sell cryptocurrency after holding it<\/a> for a year or less, your profits are subject to short-term capital gains tax. These gains are treated as ordinary income and added to your total taxable earnings for the year. Since tax rates are based on income brackets, different portions of your earnings are taxed at different rates, as explained above. <\/p>\n Here are the federal income tax rates for the 2024–2025 tax year. You apply the 2024 tax brackets to income earned in the 2024 calendar year, reported on tax returns filed in 2025.<\/p>\n You pay long-term capital gains tax if you sell cryptocurrency after holding it for more than a year. Unlike short-term gains, these aren’t taxed as ordinary income. Instead, tax rates are based on your total taxable income and filing status. Long-term capital gains tax rates are 0%, 15% or 20%, making them lower than short-term rates. Holding crypto longer can reduce your tax burden significantly.<\/p>\n Here is a table outlining long-term crypto capital gains tax for the calendar year 2024. These rates are applicable when filing tax returns in 2025.<\/p>\n The standard deduction is the portion of your income that’s exempt from federal taxes before tax rates are applied, reducing your taxable income.<\/p>\n Here is a table regarding tax deductions in the calendar year 2024. These amounts are applicable when filing for tax returns in 2025.<\/p>\n In the US, crypto airdrops<\/a> are treated as ordinary income by the IRS and taxed at the time they come under the taxpayer’s full control. The taxable amount is based on the tokens’ fair market value at that moment, even if the taxpayer didn’t request them. Later, selling or trading those tokens may trigger capital gains tax, depending on the price difference between receipt and disposal.<\/p>\n The taxable event hinges on control: If tokens automatically appear in a taxpayer’s wallet<\/a>, the income is typically recognized upon arrival. If the tokens require manual claiming (e.g., through a transaction), the taxable event occurs when the claim is completed. Either way, the fair market value at that point determines the income reported.<\/p>\n When the taxpayer sells or trades the airdropped tokens, they incur a capital gain or loss, calculated as the difference between the value at receipt (the basis) and the value at sale or trade. Moreover, the holding periods matter: If sold within a year, gains are taxed at ordinary income rates (10%–37%, based on income brackets). If held longer than a year, gains qualify for lower long-term capital gains rates (0%, 15% or 20%, depending on income). Proper tracking of receipt dates and values is essential for accurate tax reporting.<\/p>\n In the US, gifting cryptocurrency is generally not a taxable event for either the giver or the recipient, meaning no immediate tax is owed. However, specific thresholds and reporting requirements must be followed to stay compliant with IRS rules. <\/p>\n For the 2024 tax year (filed by April 15, 2025), if the total value of crypto gifts to a single recipient exceeds $18,000, the giver must file a gift tax return using Form 709. <\/p>\n When the recipient eventually sells the gifted cryptocurrency, they’ll calculate capital gains or losses based on the giver’s original cost basis — the price the giver paid for the crypto. If this cost basis isn’t documented or available, the recipient may need to assume a basis of $0, which could increase their taxable gain upon sale. To avoid complications, both parties should keep detailed records of the gift’s fair market value at the time of transfer and the giver’s original cost basis.<\/p>\n Did you know?<\/strong><\/em> In the UK, giving cryptocurrency as a gift may result in capital gains tax for the giver, except for gifts to spouses or civil partners. Additionally, inheritance tax could apply if the giver dies within seven years of the gift.<\/em><\/p>\n With the April 15, 2025, deadline nearing, here are the key forms for reporting 2024 crypto transactions:<\/p>\n Form 8949:<\/strong> For reporting<\/a> capital gains and losses from crypto sales, trades and disposals. Each transaction must be listed individually.<\/p>\n<\/li>\n Schedule D (Form 1040):<\/strong> Summarizes<\/a> total capital gains and losses from Form 8949; used for calculating taxable income.<\/p>\n<\/li>\n Schedule 1 (Form 1040):<\/strong> Reports<\/a> additional income, including staking rewards, airdrops and hard forks<\/a>, if classified as taxable income.<\/p>\n<\/li>\n Schedule C (Form 1040):<\/strong> Used by self-employed individuals or businesses to report crypto-related income from mining, consulting or freelance work.<\/p>\n<\/li>\n Form 1099-MISC:<\/strong> Issued<\/a> for staking, mining or payment income over $600<\/p>\n<\/li>\n Form 1040:<\/strong> The main return form to combine income, deductions and tax liability.<\/p>\n<\/li>\n FBAR (FinCEN Form 114):<\/strong> File separately if foreign crypto accounts exceeded $10,000 in 2024.<\/p>\n<\/li>\n<\/ul>\n Here’s how to file, step by step, leveraging the detailed tax rates and forms outlined above.<\/p>\n Collect records for every 2024 crypto transaction:<\/p>\n Dates of buying, selling, trading or receiving crypto<\/p>\n<\/li>\n Amounts (e.g., 0.5 Bitcoin) and US dollar fair market value (FMV) at the time<\/p>\n<\/li>\n Cost basis (what you paid, including fees) and proceeds (what you received).<\/p>\n<\/li>\n<\/ul>\n To ensure complete records, pull data from wallets, exchanges (e.g., Coinbase) and blockchain explorers. Export transaction histories or CSVs, and note staking rewards, airdrops or mining income separately with their FMV on receipt.<\/p>\n Pinpoint which 2024 actions trigger taxes:<\/p>\n Taxable:<\/strong> Selling crypto for cash\/stablecoins, trading crypto, spending crypto or earning it (mining, staking, airdrops).<\/p>\n<\/li>\n Non-taxable:<\/strong> Buying and holding with USD, moving crypto between your wallets, gifting up to $18,000 per recipient.<\/p>\n<\/li>\n<\/ul>\n Classify each taxable event as short-term (≤1 year) or long-term (>1 year) for rate purposes.<\/p>\n For taxable sales or trades:<\/p>\n Formula:<\/strong> Proceeds (FMV at disposal) – Cost Basis = Gain\/Loss<\/em><\/p>\n<\/li>\n Example:<\/strong> Bought 1 Ether (ETH<\/a>) for $2,000 in May 2024, sold for $2,500 in November 2024 = $500 short-term gain.<\/p>\n<\/li>\n<\/ul>\n Use first-in, first-out or specific identification for cost basis (be consistent). Sum your net gains\/losses. See the “2024 Federal Income Tax Brackets” section for how these are taxed.<\/p>\n For earnings (mining, staking, airdrops):<\/p>\n Record FMV in USD when received (e.g., 10 Cardano worth $5 on June 1, 2024 = $5 income).<\/p>\n<\/li>\n Add to your other 2024 income to set your tax bracket, detailed in the sections above.<\/p>\n<\/li>\n<\/ul>\n Lower your taxable income with the standard deduction:<\/p>\n Single:<\/strong> $14,600<\/p>\n<\/li>\n Married filing jointly:<\/strong> $29,200<\/p>\n<\/li>\n Head of household:<\/strong> $21,900<\/p>\n<\/li>\n<\/ul>\n Subtract this from total income (including short-term gains and crypto income). Long-term gains are taxed separately.<\/p>\n Apply rates to your gains and income (refer to “How Crypto Tax Rates Work in 2024”):<\/p>\n Short-term gains and income:<\/strong> Ordinary rates (10%–37%).<\/p>\n<\/li>\n Long-term gains:<\/strong> 0%, 15% or 20%, based on income.<\/p>\n<\/li>\n Offset gains with losses (up to $3,000 net loss against other income; carry forward excess).<\/p>\n<\/li>\n<\/ul>\n Fill out the required IRS forms (see “Essential Forms for Filing Crypto Taxes in 2024”):<\/p>\n List capital gains\/losses and income on Form 8949, Schedule D and Schedule 1 as applicable.<\/p>\n<\/li>\n Use Schedule C if self-employed (e.g., mining business).<\/p>\n<\/li>\n Combine everything on Form 1040.<\/p>\n<\/li>\n Check Form 1099-MISC if received and file FBAR for foreign accounts over $10,000.<\/p>\n<\/li>\n<\/ul>\n Submit via IRS e-file or mail, postmarked by April 15, 2025. <\/p>\n<\/li>\n Need more time? File Form 4868 for an extension to Oct. 15, 2025, but pay estimated taxes by April 15 to avoid penalties.<\/p>\n<\/li>\n<\/ul>\n Estimate your tax from Step 6, then pay via IRS Direct Pay or check. Late payments after April 15 incur a 0.5% monthly penalty plus interest.<\/p>\n Store transaction records and forms for three to six years. The IRS is intensifying crypto scrutiny — be prepared.<\/p>\n Did you know?<\/strong><\/em> In Canada, giving cryptocurrency as a gift is generally considered a taxable disposition, requiring the giver to determine and report any capital gains or losses.<\/em><\/p>\n Here are important dates regarding the 2024–2025 tax season and 2025 transition:<\/p>\n Jan. 31, 2025:<\/strong> Some exchanges may issue voluntary 1099s (e.g., 1099-MISC).<\/p>\n<\/li>\n April 15, 2025:<\/strong> File taxes on crypto earned in 2024.<\/p>\n<\/li>\n<\/ul>\n Jan. 1, 2025:<\/strong> Form 1099-DA reporting begins.<\/p>\n<\/li>\n Dec. 31, 2025:<\/strong> Safe harbor ends for adjusting universal cost basis.<\/p>\n<\/li>\n Jan. 31, 2026:<\/strong> Receive Form 1099-DA for 2025 trades.<\/p>\n<\/li>\n<\/ul>\n June 15, Sept. 15, 2025, etc., for active traders.<\/p>\n<\/li>\n<\/ul>\n The IRS introduced new rules for tax filing and reporting aimed at US cryptocurrency taxpayers, but these regulations have encountered significant pushback. Both the US Senate and House of Representatives voted to repeal them under the Congressional Review Act (CRA), and President Donald Trump has signaled support for the rollback. Despite this uncertainty, understanding these rules remains crucial, especially with deadlines looming in 2025<\/a>.<\/p>\n A core component of the new rules is calculating taxes using a cost basis — the original amount invested in an asset, including fees or commissions. Accurately tracking cost basis is vital for proper tax reporting and prevents double taxation on reinvested earnings. It’s the starting point for determining capital gains or losses. <\/p>\n Under the updated IRS guidelines, crypto investors must now track the cost basis (original purchase price) separately for each account or wallet, moving away from a universal tracking approach. This requires recording the purchase date, acquisition cost and specific transaction details.<\/p>\nHow does the IRS tax crypto?<\/h2>\n
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How crypto tax rates work in the US<\/h2>\n
Understanding crypto capital gains tax in the US<\/h2>\n
2024–2025 federal income tax brackets for crypto earnings<\/h3>\n
Long-term capital gains tax for crypto earned in 2024<\/h3>\n
2024–2025 standard deduction: Reduce your crypto taxable income<\/h2>\n
How are crypto airdrops taxed in the US?<\/h2>\n
Crypto gifting rules and tax implications in the US<\/h2>\n
Essential forms for filing crypto taxes in 2024<\/h2>\n
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Step-by-step guide to filing crypto taxes for the 2024–2025 tax season<\/h2>\n
Step 1: Gather all crypto transaction records<\/h3>\n
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Step 2: Identify taxable events<\/h3>\n
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Step 3: Calculate capital gains and losses<\/h3>\n
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Step 4: Calculate crypto income<\/h3>\n
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Step 5: Apply the 2024 standard deduction<\/h3>\n
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Step 6: Determine your tax rates<\/h3>\n
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Step 7: Complete the necessary tax forms<\/h3>\n
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Step 8: File your return by April 15, 2025<\/h3>\n
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Step 9: Pay any taxes owed<\/h3>\n
Step 10: Keep records for audits<\/h3>\n
Important dates and deadlines for 2024–2025 tax season and beyond <\/h2>\n
2024 tax season<\/h3>\n
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2025 transition<\/h3>\n
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Quarterly estimates<\/h3>\n
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New IRS crypto tax rules for 2025: What you need to know<\/h2>\n