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CryptoTaxFree.io

Free Tax Loss Calculator

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Calculator Examples Strategies FAQ

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What is Crypto Tax Loss Harvesting?

Tax loss harvesting is a legal strategy where you sell cryptocurrencies at a loss to reduce your tax bill. These losses offset capital gains and can reduce your taxable income by up to $3,000 per year.

Save 15-37%

On Your Losses

100% Legal

IRS Approved

No Wait

Buy Back Instantly

💡 Pro Tip: Unlike stocks, crypto has no wash sale rule - you can sell and immediately rebuy to maintain your position while claiming the tax deduction!

How to Use This Calculator

1

Add Your Holdings

Enter each crypto you own with amount and purchase price

2

Set Your Tax Rate

Select your federal and state tax brackets

3

Calculate Savings

See your exact tax savings and which cryptos to harvest

4

Execute & Save

Export results and execute trades on your exchange

💡 Tip: Use average buy price if you made multiple purchases. Current prices update automatically every 30 seconds!

Calculate Your Tax Losses

Enter your crypto holdings to discover potential tax savings

Your Crypto Holdings

Click "Add Crypto" to start calculating your tax losses

Tax Settings

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How Tax Loss Harvesting Works

1

Identify Losses

Find cryptocurrencies in your portfolio that are worth less than what you paid for them.

2

Sell to Realize Losses

Sell the cryptocurrency to "realize" the loss for tax purposes. This creates a tax deduction.

3

Offset Gains & Income

Use losses to offset capital gains first, then up to $3,000 of ordinary income per year.

✓

No Wash Sale Rule (Yet)

Unlike stocks, crypto currently has no wash sale rule - you can buy back immediately!

Market Prices via CoinGecko

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Why Trust This Tool?

  • 100% Free, No Hidden Fees
  • Real-Time Price Data
  • No Email Required
  • IRS-Compliant Calculations

Need Full Tax Reports?

For complete IRS forms and detailed reporting:

Try Professional Software

Affiliate link - supports this free tool

Real-World Examples

See how much you could save with these scenarios

📈 Example 1: Sarah's Mixed Portfolio

Sarah's Holdings:

  • • 0.5 BTC bought at $60,000 Cost: $30,000
  • • 10 ETH bought at $4,000 Cost: $40,000
  • • 100 SOL bought at $200 Cost: $20,000
Total Investment: $90,000

Current Values (Example):

  • • BTC at $43,000 -$8,500 loss
  • • ETH at $2,200 -$18,000 loss
  • • SOL at $95 -$10,500 loss
Total Losses: -$37,000

Tax Savings (24% bracket):

$37,000 × 24% =

$8,880

💡 Sarah can sell these positions, claim the losses, and immediately repurchase to maintain her positions!

💼 Example 2: Mike's Day Trading Losses

Mike's Situation:

Mike actively traded crypto in 2024 and has:

  • • Realized Gains: +$25,000
  • • Unrealized Losses: -$30,000
  • • Tax Bracket: 32%

Tax Strategy:

Without Harvesting:

Owes taxes on $25,000 gains = $8,000 tax bill

With Harvesting:

$25,000 gains - $30,000 losses = $5,000 net loss

$0 capital gains tax + $3,000 income deduction

Total Tax Benefit:

Saved on gains + income deduction

$8,960

💡 Plus $2,000 in losses carry forward to next year!

🏠 Example 3: Jennifer's Long-Term Hold Strategy

Jennifer's Portfolio:

Bought during 2021 bull run, still holding:

  • • 2 BTC at $65,000 $130,000
  • • 50 ETH at $4,800 $240,000
  • • 1000 ADA at $3 $3,000
Total Investment: $373,000

Current Situation:

  • • Current Value: $215,000
  • • Unrealized Loss: -$158,000
  • • Annual Income: $150,000
  • • Tax Bracket: 35% + 9.3% CA

Multi-Year Tax Strategy:

Year 1: Harvest $50,000 losses Save $22,150
Year 2: Harvest $50,000 losses Save $22,150
Year 3: Harvest $58,000 losses Save $25,694
Total Tax Savings: $69,994

💡 By strategically harvesting over multiple years, Jennifer recovers nearly half her losses through tax savings!

Advanced Tax Harvesting Strategies

Maximize your tax benefits with these professional tips

🎯 Strategic Timing

  • • Harvest losses in December to offset current year gains
  • • Consider spreading large losses across multiple tax years
  • • Time harvests when market volatility is high
  • • Coordinate with other investment sales

📊 Offset Priority

  • • First: Offset short-term capital gains (higher tax rate)
  • • Second: Offset long-term capital gains
  • • Third: Deduct up to $3,000 from ordinary income
  • • Fourth: Carry forward remaining losses

🔄 Rebalancing Opportunity

  • • Use harvesting to rebalance portfolio tax-free
  • • Switch between similar cryptocurrencies
  • • Upgrade to coins with better fundamentals
  • • Maintain market exposure while claiming losses

💰 High-Income Strategies

  • • More valuable in higher tax brackets (up to 37% federal)
  • • State taxes add additional savings (up to 13.3%)
  • • Consider Net Investment Income Tax (3.8%)
  • • Coordinate with quarterly estimated tax payments

⚠️ Important Considerations

  • • Cost Basis Tracking: Keep detailed records of all purchases and sales for accurate tax reporting
  • • Specific Identification: Use specific lot identification to maximize losses (sell highest cost basis first)
  • • Future Legislation: Wash sale rules may apply to crypto in the future - harvest while you can!
  • • Professional Advice: Complex situations should be reviewed with a tax professional

Frequently Asked Questions

Everything you need to know about crypto tax loss harvesting

Is tax loss harvesting legal?

Yes, absolutely! Tax loss harvesting is a completely legal and IRS-approved strategy that has been used by investors for decades. It's simply selling investments at a loss to reduce your tax liability - a smart financial move encouraged by the tax code.

What is the wash sale rule and does it apply to crypto?

The wash sale rule prevents you from claiming a loss on stocks if you buy the same stock within 30 days. Currently, this rule does NOT apply to cryptocurrency, meaning you can sell crypto at a loss and immediately buy it back while still claiming the tax deduction. This is a significant advantage for crypto investors!

How much can I deduct from my taxes?

You can use capital losses to offset an unlimited amount of capital gains. If your losses exceed your gains, you can deduct up to $3,000 per year from your ordinary income. Any remaining losses carry forward indefinitely to future tax years.

When is the best time to harvest losses?

The best time is typically near the end of the tax year (December) when you have a clear picture of your gains and losses. However, you can harvest losses anytime during the year, especially during market downturns when losses are maximized.

Do I need to stop investing in crypto to harvest losses?

No! Since there's no wash sale rule for crypto, you can sell to realize the loss and immediately repurchase the same cryptocurrency. This allows you to maintain your investment position while claiming the tax benefit.

How do I report harvested losses to the IRS?

Report all cryptocurrency transactions on IRS Form 8949 and summarize them on Schedule D of your tax return. Keep detailed records of all trades including dates, amounts, and prices. Consider using tax software or a professional for accurate reporting.

Can I harvest losses on stablecoins or DeFi positions?

Yes, you can harvest losses on any cryptocurrency including stablecoins (if they've lost peg) and DeFi tokens. The same rules apply - selling at a loss creates a deductible capital loss. However, be aware that DeFi transactions can be complex for tax purposes.

Ready to Save on Taxes?

Don't leave money on the table! Calculate your tax savings now and harvest those losses before year-end.

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