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Author: Admin | 2025-04-28
Can you write off crypto losses on taxes?Cryptocurrency losses can be valuable when it comes to taxes, as they can help offset gains and reduce your taxable income. In this guide, we explain how to properly report your crypto losses, including the forms you'll need and strategies to make the most of your deductions. When in doubt, consult a crypto tax professional like ours at TokenTax.Use our free crypto profit calculator to make plans, imagine future gains, and calculate potential crypto losses.How to report your crypto lossesReporting crypto losses on taxes is important for two primary reasons:The IRS requires that you report all sales of crypto, as it considers cryptocurrencies property.You can use crypto losses to offset capital gains (including future capital gains if there is applicable carryover) and/or to deduct up to $3,000 from your income.There are two ways in which reporting crypto losses can lower your crypto taxes: one is through income tax deductions, and the other is to offset capital gains.Income tax deductionIf you experience total capital losses across all assets, you may deduct up to $3,000 from your income. You may not deduct losses from your income if you experienced total capital gains across all assets, but you can still use these losses to offset capital gains in other assets.Excess net capital losses can also be carried forward to future years to be deducted against capital gains and against up to $3,000 of other kinds of income.Offsetting capital gainsRegardless of your assets' collective performance, virtual currency losses can be used to offset other capital gains, either from the current tax year or future tax years (if carried forward).How to offset capital gains example:In 2022, Jill had net gains of $4,000 and net losses of $30,000, for an overall capital loss of $26,000, which she reports on
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