Frequently Asked Questions
How are crypto taxes calculated?
Crypto is taxed as property. Capital gain = Sell Price - Cost Basis. FIFO/LIFO/HIFO determine which cost basis to use. Gains held over 1 year get long-term rates (0-20% US), under 1 year get income rates (10-37%).
What is FIFO vs LIFO vs HIFO?
FIFO sells oldest coins first (often long-term gains). LIFO sells newest (may create short-term losses). HIFO sells highest-cost-basis first (minimizes current tax). HIFO is usually most tax-efficient.
Do I pay taxes on unrealized gains?
No. Tax only applies when you dispose of crypto (sell, trade, spend). Holding crypto that increased in value is not taxable. Mining/staking/airdrop income is taxed when received.
Can I deduct crypto losses?
Yes. Losses offset gains. In the US, net losses up to $3,000/year can offset ordinary income. Remaining losses carry forward to future years. Tax-loss harvesting is a key strategy.
What crypto events are taxable?
Taxable: sell for fiat, trade crypto-to-crypto, spend on goods, receive as income. Non-taxable: buy with fiat, wallet-to-wallet transfer, gifting (below limits), holding.