It’s been a rough year for crypto — but investors still may have a tax bill. Here’s how to prepare

It’s been a rough year for crypto — but investors still may have a tax bill. Here’s how to prepare


After a rough year for cryptocurrency, taxes may not be a top priority for digital currency investors battered by steep losses.

But the falling crypto market and the recent collapse of digital currency exchange FTX may affect next year’s tax bill — and beyond, according to financial experts.

Despite recent losses, “gains from earlier in the year are still on the books,” said Andrew Gordon, tax attorney, CPA and president of Gordon Law Group.

More from Personal Finance:
Here’s when to cash in those Series I bonds, experts say
Why it may take a while for housing inflation to cool off
Interest rates on retail credit cards are ‘crazy high,’ with some topping 30%

Typically, crypto trading is more active when the market is going up, and that’s when you are more likely to incur gains, he said.

However, it’s also possible to have profits even when the market drops, depending on when you bought and sold the assets.

Facing big losses in crypto? Here's how to ease your financial pain

The IRS defines cryptocurrency as property for tax purposes, and you must pay levies on the difference between the purchase and sales price. 

While buying digital currency isn’t a taxable event, you may owe levies by converting assets to cash, trading for another coin, using it to pay for goods and services, receiving payment for work and more.

How to reduce your crypto tax bill

If you’re sitting on crypto losses, there may be a silver lining: the chance to offset 2022 gains or carry losses forward to reduce profits in future years, Gordon explained.

The strategy, known as tax-loss harvesting, may apply to digital currency gains, or other assets, such as year-end mutual fund payouts. After reducing investment gains, you can use up to $3,000 of losses per year to offset regular income. 

And if you still want exposure to the digital asset, you can “sell and rebuy immediately,” said Ryan Losi, a CPA and executive vice president of CPA firm, PIASCIK.

Currently, the so-called “wash sale rule” — which blocks investors from buying a “substantially identical” asset 30 days before or after the sale — doesn’t apply to cryptocurrency, he said. 

How the FTX collapse may affect your taxes

While crypto taxes are already complex, it’s even murkier for FTX customers. “There are different ways it can be treated, depending on the facts of the case,” Losi said.

You may be able to claim a capital loss, or “bad debt deduction,” and write off what you paid for the asset. But “it should only be done when that loss is certain,” Gordon said.

With FTX’s bankruptcy case in limbo, customers may opt to file for a tax extension and wait for more details to emerge, Losi said.

“It’s a question for the individual and their tax preparer,” Gordon added. “There’s not a clear way to go with it.”



Source

Delta’s summer travel outlook tops estimates as CEO says high-end demand is holding up
Business

Delta’s summer travel outlook tops estimates as CEO says high-end demand is holding up

A Boeing 767-332(ER) from Delta Air Lines takes off from Barcelona El Prat Airport in Barcelona on Oct. 8, 2024. Joan Valls | Nurphoto | Getty Images Delta Air Lines trimmed its 2025 profit forecast as it deals with lower-than-expected demand this year and the industry manages a glut of flights, but the carrier’s outlook […]

Read More
Cereal maker WK Kellogg shares jump 50% on report of possible  billion deal with Ferrero
Business

Cereal maker WK Kellogg shares jump 50% on report of possible $3 billion deal with Ferrero

Boxes of various Kellogg’s cereals are displayed on shelves at a Walmart Supercenter on May 6, 2025 in Austin, Texas. Brandon Bell | Getty Images Shares of WK Kellogg soared more than 50% on Wednesday following a report that chocolate maker Ferrero is close to a roughly $3 billion deal to buy the cereal company. […]

Read More
Eli Manning says he’s no longer interested in buying a piece of the NFL’s Giants: ‘It’s too expensive for me’
Business

Eli Manning says he’s no longer interested in buying a piece of the NFL’s Giants: ‘It’s too expensive for me’

Former New York Giants quarterback Eli Manning is no longer interested in buying a minority stake in his old team, telling CNBC Sport Wednesday that he’s been priced out. “Basically, it’s too expensive for me,” Manning told CNBC Sport in an interview. “A 1% stake valued at $10 billion turns into a very big number.” […]

Read More