End of Year Crypto Tax Strategy: Tax-Loss Harvesting for the U.S.

As a crypto tax attorney, I have plenty of clients that come to me at the end of the year asking how they can save on their tax bill. The BEST tip I can give anyone is tax-loss harvesting

Tax loss harvesting refers to selling crypto that you are holding that's currently at a loss, meaning that you bought it at a price higher than it is today. And so if you sell it, you will realize the capital loss. And capital losses can be used to offset capital gains in the same year from either other crypto sales or even stocks or even properties.

But not only that, but capital losses can be carried forward to future years. So if you don't have any capital gains this year, when the market recovers in the future, you might then, and then you'll have capital losses to offset those gains. In addition, capital losses can offset income up to $3,000 per year, and any remainder is then also carried forward to future years.

The wash sale rule doesn't apply to crypto. This means you can sell your crypto at a loss, and buy it back. (I normally reccomend waiting 24hrs).

That's the best tax strategy I can give anyone who is looking to save money on their taxes. I'd also start EARLY and not wait until the last minute!

Disclaimer: The information provided pertains to the United States. Information contained in this post and in the comments is intended for general informational and educational purposes and does not constitute legal advice. Reading this post, reading the comments, receiving a reply to your comment, or sending a direct message to this account does not create an attorney-client relationship. Contact an attorney for legal advice regarding your specific situation.

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