How to Report Crypto Losses on Taxes

What do I do if I have no crypto capital gains, only crypto capital losses?

Crypto is a volatile market, and many crypto traders have experienced losses during bear market cycles. Luckily, there are major advantages to reporting your crypto taxes even if you had a loss. Because digital currencies are treated as property, you report cryptocurrency tax whether you had a gain or loss. 

In the U.S. and in many other countries, it’s important that you report your crypto taxes even if you had a loss. Your capital gain or loss is reported on the Form 8949 and 1040 Schedule D. 

How do I report crypto losses on taxes? 

To calculate your total losses, first you net your total long term gains and losses together, and you then net your total short term gains and losses together. Finally, net the long term gain/loss and short term gain/loss together to get your total capital gains or losses. 

Are crypto losses deductible?

When filing your tax return, you have a few options if you have a loss. Your losses in crypto can offset other capital gains, and/or you can carry forward the losses to future years to offset gains in crypto or other capital gains. 

You can also deduct up to $3,000 of your losses from your income. If you deduct $3,000 from your income but have more losses than that, then you can still carry forward the rest of the losses to deduct from future years or to offset future gains. 

You can only deduct if you have total capital losses across all your assets. If you have crypto losses but enough capital gains with other capital assets to have an overall capital gain during the tax year, then you cannot deduct the losses, but your crypto losses will still offset capital gains in other assets.

I haven’t sold an asset. Can I claim a loss on it?

In order to claim a loss, you will need to have made a taxable event on the asset — this means selling it, exchanging it for another crypto, or spending it. Otherwise, the loss remains an unrealized loss and thus cannot be reported as a capital loss.