PR: Write off Crypto Losses With


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Last Thanksgiving, Bitcoin was in the middle of a bull run that would result in a record high of $19,511 just before Christmas. Now, Bitcoin is worth just $3,752.

If you bought Bitcoin and other cryptos when their prices were high, there’s a silver lining around the gray state of crypto markets now: any losses you take this year could place you in a lower tax bracket. What’s more, claiming those losses is easier than you might assume.

For the purposes of taxation, the US and most other governments consider cryptocurrencies to be assets. This means that whenever you trade cryptocurrency, the transaction falls into one of two categories: a capital gain or a capital loss.

Capital gain: A capital gain occurs when you sell cryptocurrency for more than the amount that you paid to purchase it.
Capital loss: If you sell cryptocurrency for less than the amount that you paid for it, this is considered to be a capital loss.

You have to sell or buy an asset to trigger a taxable gain or loss. Once you decide to make a move, tax authorities consider the loss to be “realized.” If your loss is great enough, you may be able to use it to enter a lower tax bracket.

One of the biggest benefits of claiming a loss is that you can offset income gained from other sources.

In the US, the IRS lets you deduct up to $3,000 worth of net capital losses each year from the amount of money you’ve earned at your day job. If the amount you lost was greater than $3,000, you can get another deduction of up to $3,000 when you file your taxes next year.

If you currently make just over $50,000 per year at your job, that $3,000 cryptocurrency loss could place you in a lower tax bracket. This could result in thousands of dollars of tax savings.

What’s more, if you’ve earned some income through stocks or through the sale of property, there’s no limit to the amount you can deduct from those revenues.

If you’re in the $38,701 – $82,500 tax bracket and your crypto capital loss deduction puts you below the $38,700 mark, you’d only have to pay $952.50 plus 12% of any amount over $9,525. But if you made $38,701 or more, you’d have to pay over four times as much in taxes, plus 22% of any amount over $38,700.

In other words, if you fail to deduct your crypto losses and you fall into the third bracket as a result, you’d have to pay at least $4,453.50 to the IRS. But if you do file your losses and make it into bracket two, you’d pay just $952.50.

Total tax savings: $3,501.50.

If you’re married and filing jointly or widowed, moving into a lower tax bracket can result in even more tax savings. If you made $77,402 in 2018, you’d have to pay the IRS $8,907 and change.

Dropping down to the $19,051-$77,400 tax bracket by filing a crypto loss would save you $7,002.

In addition to cryptocurrency traders, cryptocurrency miners can use deductions to reach lower tax brackets.

A notice that the IRS published in March of 2014 provides some relevant details:

“…when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income.”

If the value of the cryptocurrency you mined decreased and you decide to sell it, then that would mean that you have triggered a capital loss. You can report this loss in the same way that you would if you bought and then sold your coins through an exchange.

IRS analysts told CNBC that electricity costs and other expenses may be written off as well.

Figuring out how much you’ve made or lost can be a headache, particularly if you haven’t been keeping track of your purchases or if you placed a huge amount of trade orders last year.

Sorting out how much you lost or earned requires access to historical pricing data. Without that historical data, you won’t be able to determine what the price of your crypto asset was when you bought and sold it.

Fortunately, there is software available that can crunch all your crypto tax data for you.

With, can import your transactions from all your cryptocurrency wallets and exchanges. The interface walks you through how to do the imports.

At the end of the import process, you can download IRS form 8949. This is the form you need to submit to report your loss.

Other download options include CSV, TaxACT and TurboTax.

If you use a crypto tax calculator to do your own taxes, filing your taxes is a straightforward process. All you have to do is take the total from IRS form 8949 and transfer that to IRS form 1040 Schedule D.

In fact, most CPAs that work with crypto traders use CoinTracking and other publicly available software to determine what their clients owe. These tools are not difficult to use. Many have free trials, which let you see how they work for yourself before you commit.

If you lost money in crypto markets last year, you may be able to offset some– or perhaps even all– of those losses at tax time. Reporting your capital losses might help you move to a lower tax bracket. If your deductions qualify you for a lower bracket, filing them could save you thousands of dollars when you submit your taxes this year.

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Cryptocurrency and Taxes: How to Use 2018’s Losses to Your Advantage


Taxes have been a hot topic in the cryptocurrency world this year. Many countries have been trying to figure out how to tax crypto assets, while traders have been figuring out how to lever them to write off losses. As bitcoin and other cryptocurrencies enter the mainstream, tax reduction strategies are starting to emerge.

Also read: UK Investors to Pay Capital Gains and Income Tax on Bitcoin Investments

Governments Belatedly Address Bitcoin Taxation

As cryptocurrencies have entered the collective conscious and adoption has grown, governments have been trying to figure out how to tax them. Most recently, the U.K. government released a sprawling crypto tax advice document. Her Majesty’s Revenue and Customs (HMRC) reveals in the document that individual investors will be liable to pay capital gains tax each time they sell crypto assets such as BTC for profit. HMRC ruled that investors would not be allowed to classify their investment in cryptocurrency as “gambling”, which is tax-free when it comes to winnings.  Cryptocurrency and Taxes: How to Use 2018's Losses to Your Advantage

At the beginning of the year, U.K. Prime Minister Theresa May said her government would be looking at bitcoin and cryptocurrencies “very seriously” because of their potential to be “used by criminals.”

Elsewhere in Europe, the European Union has been advised to devise common cryptocurrency rules – and that includes tax. While Switzerland has decided to do away with regulation, the Swiss Federal Council has stated that it wants “the best possible framework conditions so that Switzerland can establish itself and evolve as a leading, innovative and sustainable location for fintech and blockchain companies.” In Russia, while the government is working out a regulatory framework, citizens are obliged to pay 13 percent tax on their crypto-related incomes.

This year in Asia, Korea said it is planning to tax cryptocurrencies and initial coin offerings (ICOs), while proposals to lower taxes on crypto in Japan were announced this month; currently the government can take as much as 55 percent from cryptocurrency transactions as miscellaneous income. Cryptocurrency and Taxes: How to Use 2018's Losses to Your Advantage

Taxation guidelines in the U.S. have generally been unclear. On Dec. 21, lawmakers filed a bill to create tax exemptions for certain cryptocurrency transactions. The state of Ohio also said it would accept BTC from its citizens to pay taxes.

Meanwhile, South Africa’s government, generally considered to be crypto-friendly, this year said income accrued from crypto transactions must be declared – and said it would be cracking down on tax-dodging cryptocurrency traders.

How Cryptocurrencies Can Help You Save on Taxes

While governments are figuring out how to tax cryptocurrencies, there are actually ways in U.S. citizens can use them to their advantage to pay less taxes.  This is due to a 2014 notice by the Internal Revenue Service (IRS) which treats cryptocurrencies as an investment property, rather than a currency. Whenever you trade cryptocurrency, the transaction is either a capital gain (where you make money) or a capital loss (where you lose money). And any losses this year could ultimately place you in a lower tax bracket.

The IRS allows taxpayers to deduct $3,000 in capital losses for any given year from money earned from a day job. Losses beyond that cannot be deducted until several years later.

As an example, let’s look at someone who bought $5,000 worth of BTC this year. After turning that into $10,000 through trading, they later lost cash due to a dip in the markets and took a big hit, losing $8,000. They cashed out, walking away with just $2,000. They would then be able to harvest a loss of $3,000 for the year which would be deducted from their taxable income. If that person made $50,000 in regular income, only $47,000 of it would be taxable.

In order to write off cryptocurrency losses as tax deductible in the U.S., it’s essential to properly file, with exact dates, all transactions incuding gains and losses. Certain online tools, such as, can be useful in calculating capital gains and losses. While 2018 has been a bad year for cryptocurrency investors, the ability to write off thousands of dollars of bad trades should provide some consolation.

Disclaimer: This editorial is intended for informational purposes only. and the author are not experts on taxes and cannot be held responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by following the information in this article. 

How have you managed with taxation on your crypto assets this year? Let us know in the comments section below.

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