Losses on Crypto

The cryptocurrency market, just like the stock market, has been on a rout recently. You may be wondering if you sell or dispose of your crypto at a loss, how does that affect your taxes. The IRS has deemed cryptocurrency as property, so gains and losses on it are generally considered capital, similar to holding a stock or a bond. Capital gains and losses are taxed differently than other types of income. Long term capital gains are generally taxed at 15% for most taxpayers. Capital losses can be used to offset any capital gains, plus $3,000 of other income, with any remaining loss being carried forward indefinitely. What this means is that if you sell crypto for less than you paid for it, you can take up to $3,000 of that loss against your other types of income. This can be a useful tax planning strategy if you have lost some money on crypto recently. Remember that purchasing goods or services with cryptocurrency as well as converting one type of crypto to another are all considered taxable sales of currency which must be reported.