Cryptocurrency Tax Calculator – Forbes Advisor

Use our crypto tax calculator below to determine how much tax you might pay on crypto you sold, spent or exchanged.

Calculator disclaimer: Calculations are estimates based on the tax law as of January 2021. These rates are subject to change. Check the IRS website for the latest information about virtual currency gains.

Do You Have to Pay Taxes On Crypto?

Even though cryptocurrencies were designed to be decentralized and free from government oversight, Uncle Sam still expects his fair share come tax time. This means you may owe taxes if your coins have increased in value, whether you’re using them as an investment or like you would cash.

How Is Cryptocurrency Taxed?

Generally, the IRS taxes cryptocurrency like property and investments, not currency. This means all transactions, from selling coins to using cryptos for purchases, are subject to the same tax treatment as other capital gains and losses.

Because of this, long-term crypto investors have a valuable opportunity: If they hold onto their coins for at least a year, they can benefit from lower long-term capital gains taxes, which range from 0% to 20%, depending on your income level. Short-term crypto gains on purchases held for less than a year are subject to the same tax rates you pay on all other income: 10% to 37% for the 2022-2023 tax filing season, depending on your federal income tax bracket.

These taxes apply even if you use crypto to make purchases, meaning you may be on the hook for sales tax plus taxes on any gains your crypto has made since you first bought or received it.

You may also owe taxes on crypto if you earn it by mining cryptocurrency or receive it in exchange for goods and services. In these instances, it’s taxed at your ordinary income tax rates, based on the value of the crypto on the day you receive it. (You may owe taxes if you later sell the crypto you mined or received at a profit.) 

How to Report Cryptocurrency on Taxes

You’ll have to report any gains (or losses) you experience when you buy and sell cryptocurrencies to the IRS. Luckily, many cryptocurrency exchanges provide transaction reports that include all buy, sell and exchange transactions that occur in your account.

If all of your crypto transactions occur on one exchange, then, gathering the information you need to report cryptocurrency on your tax return should be easy. If you have crypto transactions across several exchanges, crypto wallets or crypto credit cards, however, things may get more complicated. You’ll need to get a report from each place a transaction occurred or track the transactions yourself.

To simplify this process, crypto-focused tax software programs like CoinTracker or TokenTax allow you to input all of your crypto transactions across all the exchanges you use and generate a cost-basis report to assist with tax reporting. (These programs may charge a fee for their services.)

After you’ve collected all of your crypto transactions, you must report them on IRS Form 8949, Sales and Other Dispositions of Capital Assets. This form is divided into two sections: short term (for crypto held one year or less) and long term (for crypto held longer than one year).

Take your total short- and long-term capital gains and list them on Schedule D, Capital Gains and Losses.