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Author: Admin | 2025-04-28
Her income taxes. In 2023, she has more success in the market and has an overall gain of $15,000. She can use $15,000 of her $26,000 of 2022 losses to completely offset her gains. In 2024, Jill has $20,000 of overall gains. She uses the remaining $11,000 of her 2022 losses to offset some of her gains, reducing her capital gains total to $9,000.Strategically selling assets at a loss in order to offset your gains is called crypto tax-loss harvesting. Looking to calculate your crypto profit? Try our free crypto profit calculator.Do capital losses offset short-term or long-term capital gains? Capital losses are at first applied to offset capital gains of the same nature, which is to say short-term losses are first subtracted from short-term gains and long-term losses from corresponding long-term gains. If net losses of either short- or long-term capital gains remain after this is done, they can then be used to deduct against gains of the opposite kind.Crypto losses to offset gains example:Short-term capital gains: $5,000Short-term capital losses: $7,000Long-term capital gains: $8,000Long-term capital losses: $6,000Step 1: Apply losses to offset gains of the same nature.$5,000 short-term capital gains - $7,000 short-term capital losses = -$2,000 short-term net loss.$8,000 long-term capital gains - $6,000 long-term capital losses = $2,000 long-term net gain.Step 2: If there are remaining losses of either type, apply them to offset gains of the opposite kind.In this example, we have $2,000 in short-term losses we can use to offset long-term gains of $2,000, resulting in no long-term capital gains for tax purposes.Tax savings by claiming crypto lossesTheoretically, there is no limit to how much you can save on your taxes by reporting crypto losses on taxes if you have corresponding capital gains from other assets. US taxpayers can even use crypto capital losses to
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