How to File Crypto Taxes: Step-by-Step Guide
Complete guide to reporting cryptocurrency transactions on your tax return. Calculate gains, track trades, and stay compliant with tax regulations.
Understanding Crypto Taxes
Cryptocurrency transactions are taxable events in most countries. Whether you've sold crypto for profit, traded one coin for another, or earned crypto through mining or staking, you likely have tax obligations to report.
This guide provides a general framework for crypto tax reporting. For basic taxation concepts, see our crypto tax basics guide. Always consult a tax professional for advice specific to your jurisdiction.
⚠️ Important Disclaimer
Tax laws vary significantly by country and change frequently. This guide provides general educational information only. Consult a qualified tax advisor in your jurisdiction for specific advice.
What Triggers a Taxable Event?
đź”´ Taxable Events
- Selling crypto for fiat currency (USD, EUR, etc.)
- Trading crypto for another crypto
- Spending crypto on goods/services
- Receiving crypto as payment for work
- Mining or staking rewards
- Airdrops (in many jurisdictions)
🟢 Non-Taxable Events
- Buying crypto with fiat
- Holding crypto (unrealized gains)
- Transferring between your own wallets
- Gifting crypto (under annual limits)
- Donating to qualified charities
Step-by-Step Filing Process
Step 1: Gather Your Records
Collect transaction history from all exchanges and wallets you've used. You'll need:
- Purchase dates and prices (cost basis)
- Sale dates and prices
- Transaction fees paid
- Wallet transfers and their dates
Step 2: Calculate Gains/Losses
For each sale or trade, calculate:
Gain/Loss = Proceeds - Cost Basis - Fees
Example: Bought 1 BTC at $30,000, sold at $50,000 with $50 fees
Gain = $50,000 - $30,000 - $50 = $19,950
Step 3: Determine Holding Period
In many countries (like the US), assets held over 1 year qualify for lower long-term capital gains rates. Track your holding periods carefully.
Step 4: Use Tax Software
Crypto tax software can automatically import transactions and calculate your taxes:
- CoinTracker – user-friendly, integrates with TurboTax
- Koinly – supports 400+ exchanges
- CryptoTaxCalculator – detailed DeFi support
- TokenTax – full-service option available
Step 5: File Your Return
Report crypto gains/losses on the appropriate tax forms for your country. In the US, this typically means Schedule D and Form 8949. Consult your local tax authority's guidelines.
Cost Basis Methods
If you've bought the same crypto at different prices, you need to choose a method for determining which coins you're selling:
FIFO (First In, First Out)
The oldest purchased coins are sold first. Most common method and often required by tax authorities.
LIFO (Last In, First Out)
Most recently purchased coins are sold first. May reduce short-term gains in some situations.
Specific Identification
You choose exactly which coins to sell. Offers most control but requires detailed records.
Common Mistakes to Avoid
- ❌ Ignoring crypto-to-crypto trades – These are taxable events
- ❌ Missing DeFi transactions – Swaps, liquidity provision, and yield farming trigger taxes
- ❌ Forgetting transaction fees – Gas fees can be added to cost basis
- ❌ Not reporting losses – Losses can offset gains and reduce your tax bill
- ❌ Using exchange values instead of actual trade prices – Use the exact price at time of transaction
DeFi Tax Considerations
DeFi activities create complex tax situations. Learn more in our DeFi yield taxation guide.
Staking Rewards
Usually taxed as income when received
Liquidity Provision
LP token deposits/withdrawals may be taxable
Yield Farming
Rewards typically taxed as income
Lending Interest
Interest received is usually taxable income
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