Top 10 crypto tax tips for US citizens

Top 10 Crypto Tax Tips for US Citizens

1. Hold Over a Year for Lower Rates

Sell after 12 months—long-term capital gains tax is 0%, 15%, or 20% (based on income) vs. short-term rates up to 37%. A $10K gain held 13 months? Maybe $1,500 tax—not $3,700.

2. Harvest Losses to Offset Gains

Sell losing coins—offset unlimited capital gains, deduct up to $3K against income yearly, and carry forward extras. No wash sale rule blocks crypto yet—dump a $5K loss, save $1K+ on taxes.

3. Boost Cost Basis with Fees

Add gas and trading fees to your buy price—cuts taxable gains. Buy 1 ETH for $2K + $50 fees, sell at $3K? Gain’s $950, not $1K—saves a chunk at tax time.

4. Pick Your Lots (Not Just FIFO)

IRS lets you use Specific Identification—sell high-cost coins first (e.g., HIFO: Highest In, First Out) to shrink gains in a bull run. Needs precise records—$20K sale, $18K basis? $2K taxed, not $10K.

5. Gift Crypto Tax-Free

Gift up to $18K per person (2024 limit, likely $19K in 2025) with no tax hit—recipient takes your basis. Give $10K BTC bought at $5K—no tax now, they handle gains later.

6. Deduct Mining Costs as a Pro

If mining’s your gig (Schedule C), deduct hardware, power, even internet—slashes income tax on rewards. Casual miners? Rewards are income (FMV when received), no deductions—pro status pays.

7. Report Staking Right

Staking rewards are income when you get them—taxed at 10-37% (FMV). Lockups don’t delay it—$1K in staked ETH? Report it day one, not when unlocked—IRS is firm on this.

8. Donate Crypto for Double Wins

Donate to a 501(c)(3)—skip capital gains tax and deduct FMV if held over a year (cost basis if under). $20K BTC donation, bought at $5K? No $15K gain tax, plus a $20K write-off—huge.

9. Watch DeFi—It’s Income

DeFi lending or pools (e.g., Uniswap) usually spits out income—taxed at receipt (10-37%), not capital gains. $500 in liquidity rewards? Report it now—IRS hasn’t greenlit CGT here yet.

10. File Foreign Accounts or Pay Up

Hold crypto on foreign exchanges (e.g., Binance)? File Form 8938 (FATCA) if over $50K (single)—fines hit $10K+ if skipped. FBAR (FinCEN 114) too, if over $10K—don’t sleep on this.

-CTAS