How crypto is taxed
Tax authorities generally treat cryptocurrency as property, not currency. That means every time you dispose of it you realize a capital gain or loss — the difference between what you receive and your original cost basis. The surprise for many people is how broad “disposal” is: it isn’t just cashing out to dollars.
What counts as a disposal
- • Selling crypto for cash.
- • Trading one crypto for another — e.g. swapping BTC for ETH realizes the gain on your BTC.
- • Spending crypto on goods or services — you’ve sold it at its market value that day.
Buying and simply holding is not a taxable event.
What makes this calculator different
- Many transactions at once. Real crypto activity is a list of disposals, not one tidy sale. Add every lot and see the whole picture together.
- Short vs. long-term, separated. Each disposal is classified by holding period and taxed at the right rate — ordinary income for short-term, preferential for long-term.
- Capital-loss netting. Gains and losses net within and across holding classes, so losing positions actually reduce your bill.
- It catches the taxable events you’d miss. Every row — including crypto-to-crypto swaps and crypto you spent — is a taxable disposal.
Frequently asked questions
Is cryptocurrency taxed?+
Yes. In most jurisdictions, including the US, crypto is treated as property, so disposing of it triggers a capital gain or loss. You owe tax on the gain — proceeds minus what you originally paid (your cost basis). Simply buying and holding crypto is not taxable; the tax event happens when you sell, trade, or spend it.
What’s the difference between short-term and long-term crypto gains?+
It comes down to how long you held the coin before disposing of it. Hold for one year or less and the gain is short-term, taxed at your ordinary-income rate. Hold for more than a year and it’s long-term, taxed at preferential capital-gains rates (0%, 15%, or 20% in the US). The same coin can cost you far more in tax if sold a few days too early — this calculator separates the two so you can see the split.
Are crypto-to-crypto trades and spending crypto taxable?+
Yes — and this is what catches people out. Trading one cryptocurrency for another (say BTC for ETH) is a disposal of the BTC, so you realize a gain or loss on it even though no cash was involved. The same is true when you spend crypto on goods or services: you’ve effectively sold the crypto at its market value that day. Every disposal in this calculator is treated as a taxable event for exactly this reason.
How does tax-loss harvesting work with crypto?+
Losing positions aren’t all bad news at tax time. When you realize a loss, it nets against your realized gains, lowering your taxable amount. If your losses exceed your gains, you can typically offset up to $3,000 of ordinary income per year (US) and carry the rest forward. This calculator nets gains and losses across all your transactions, so you can see the effect immediately.
Do I have to report crypto if I only bought it?+
Buying crypto with cash and holding it is not a taxable event, and on its own it produces no gain to report — though tax forms increasingly ask whether you held digital assets at all. The tax obligation arises only once you dispose of it: selling, trading for another coin, or spending it. Until then there’s no gain or loss to calculate.
Disclaimer: This calculator is a simplified estimate for educational purposes only — not tax advice. It applies flat rates you enter and a simplified loss-netting model; it does not handle the $3,000 ordinary-income offset cap, loss carry-forwards, the tiered long-term brackets, NIIT, state tax, or wash-sale nuances, and it excludes income-side events like mining and staking. Tax rules vary by jurisdiction and change often — consult a qualified tax professional.