How to deduct crypto losses on US taxes
A cryptocurrency loss tax deduction follows a sale, swap or spend at a loss. A price drop while you hold does not count; report disposals on your return.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20262 min readFact-checked
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- Unrealized losses from holding do not qualify.
- Net capital losses offset gains and limited income.
- Keep records of proceeds, basis, dates, and fees.
For federal tax purposes, crypto falls under property rules, not currency rules.
What counts as a deductible crypto loss
You can deduct a crypto loss only when you sell, swap, or spend the asset for less than your basis. Paying a transfer fee with digital assets counts as a disposal.
How to claim the loss step by step
Work through your disposals one at a time, using the amount you received and your basis.
- 1List every disposalWrite each sale, swap, and spend from the year.
- 2Find your basisFor crypto you bought, basis is the cost plus fees.
- 3Figure each gain or lossSubtract basis from proceeds. A negative result is a loss.
- 4Report and apply the lossEnter each disposal on your IRS capital gains forms. A net capital loss offsets gains, then limited income. Unused losses carry forward.
What records to keep after filing
Keep exchange records of proceeds, basis, dates, and fees for every transaction, including asset type, units, acquisition date and time, and fair market value.
Frequently asked questions
The IRS has not applied the wash sale rule to crypto. Do not assume the stock rules apply.
No. Capital losses go on your return, not your itemized deductions.
A theft or scam loss is not a capital loss from a sale. The IRS limits the claim.
You need a completed sale, swap, or spend. Failed exchange claims are not settled.
