Crypto Tax Calculator

What is a Crypto Tax Calculator?

A crypto tax calculator is a tool for quickly estimating the taxes due on your crypto trades. The US and many jurisdictions around the world treat cryptocurrencies as property for tax purposes, making taxation on crypto trades similar to taxes on stock trades.

The free crypto tax calculator at the top of this page lets you estimate the taxes due on your trades with just a few clicks. This step is essential because it allows you to put aside funds you may owe when tax time comes. While a crypto tax calculator can’t file your taxes for you, it provides a helpful way to plan ahead by estimating the taxes due.

The IRS only considers gains or losses for disposed assets, meaning if you hold the asset, no taxes are due until you sell the asset or transfer it to someone else. The CryptoNews calculator assumes you’ve disposed of the asset and lets you adjust for the time held. Holding for one year or longer earns a lower capital gains tax rate.

How Crypto is Taxed

Crypto taxes can seem complicated, and they’re tedious if you have a lot of transactions. However, whether you have a few transactions or a few thousand, a few basic concepts apply in the US.

• Trades are treated as capital gains for tax purposes.
• Other crypto income, such as staking, yields, or interest income, is taxed as regular income.
• Capital gains taxes apply when you dispose of the asset by selling or sending it to someone else.

Let’s look at a capital gains example. For instance, let’s say you bought Bitcoin at the lows in November 2022, when prices bottomed out at about $15,500. By September of 2024, BTC’s price had recovered to the $60,000 range. A $1,000 investment at the lows would be worth nearly $4,0000. That’s nearly a 300% gain.

Do you owe taxes on the trade? That depends on whether you sold or sent the BTC to someone else. If you held, no capital gains taxes are due yet. However, if you sold during that time frame, you likely owe taxes on the gains. The good news is that if you held for more than a year, the gains are taxed as long-term capital gains, potentially reducing your tax exposure significantly.

Estates and trusts follow a tiered schedule for capital gains, ranging from 0% to 20%.

• $3,150 and under: 0% federal capital gains tax
• $3,151 up to $15,450: 15% federal capital gains tax
• $15,540 and above: 20% federal capital gains tax

Individual filers pay according to a different schedule based on income and filing status. Most households in the US will pay no more than 15% capital gains tax on long-term gains for assets held more than a year. Low-income and many mid-income households will pay 0%. However, the graduated tax rates for regular income can also affect capital gains taxes. Some mid-income households will pay 15% capital gains rates. In the example below, an income of $50,000 pushed the federal capital gains tax rate to 15%.

This example also shows that the taxable gain is $2,980, not $3,000. The IRS allows you to add trading fees to your cost basis, effectively increasing your acquisition cost. This also reduces the taxable gain. In this example, we have $20 in trading fees: $10 to buy and $10 to sell.

However, the state also takes a bite out of trading profits in most cases. The CryptoNews free tax calculator also estimates state taxes, where applicable.

How to Use a Crypto Tax Calculator

Let’s look at how to use a crypto tax calculator. The free calculator at the top of this page supports all US states, as well as the UK and Portugal. The calculator also supports custom percentages for easy estimates in other tax jurisdictions.

Step-by-Step Guide for Beginners

You’ll need some basic figures from your trade, including the investment amount, sell amount, trading fees, and your income. Bear in mind that no calculator can cover every possible tax status or situation and may not match an accurate crypto tax report. Instead, think of a crypto tax calculator as a planning tool. Nobody wants to reach tax day without the amount owed already put aside.

Let’s look at the steps to calculate your crypto taxes for total capital gains. If you want to input your trades for individual cryptocurrencies separately, you can choose individual coins instead.

Step 1: Input the Investment Amount

You can find the investment amount in your trade history for the crypto exchange you use. This becomes your cost basis for the trade.

Step 2: Input the Sell Amount

Most calculators assume a sale for the full amount you purchased. For example, if you bought 0.01 BTC, the tax calculator assumes you are selling 0.01 BTC when you close your position. Exchanges that provide detailed tax information, like Coinbase, can help if you sell partial amounts. Crypto tax software can also help if you have a lot of transactions.

Look for the sale amount in your transaction history and input this amount in the Sell Amount field.

Step 3: Input Investment Fees

While you can’t itemize investment fees, the IRS allows you to use these fees to adjust your cost basis. The amount you pay for exchange trading fees increases your cost for tax purposes, reducing your taxable gain.

Look up this number on the exchange you used for the trade, or use an estimate if you want a ballpark figure.

Step 4: Input Exit Fees

You’ll usually pay a second trading fee when you sell your position. This amount also increases your cost basis for tax purposes, reducing your tax liability.

Step 5: Input Annual Income

Your annual income helps determine your capital gains tax rate. Input your annual taxable income.

Step 6: Select Your State or Region

Each state in the US has its own tax structure. Choose your state for a more accurate assessment of your taxes due.

Step 7: Choose Long-Term or Short-Term

Short-term capital gains for assets held less than a year are taxed at your regular income tax rate. By default, the CryptoNews crypto tax calculator assumes a long-term rate. Check the box if you need to calculate a short-term tax rate.

If everything looks good, tap the “Calculate” button to review your estimated crypto taxes.

Tips for Avoiding Common Mistakes

Tax calculators only know the information you provide. Some may also lack key features, such as state tax support or fees. Here are some tips to ensure a more accurate estimate for your crypto tax reports.

• Double-check inputs. A missing zero or a mistyped number will result in an incorrect tax estimate.
• Select the correct holding period. Some crypto tax calculators default to short-term holdings, whereas others default to long-term. Check this for accuracy.
• Choose a calculator with state support. State taxes can be as much as half the federal rate. Look for a calculator that supports your state for the most accurate estimates.
• Choose a calculator with support for trading fees. The IRS allows you to add trading costs to your cost basis, reducing your gain for tax purposes. Two popular calculators we reviewed do not support this calculation.

Filing Taxes Based on Calculator Results

A cryptocurrency tax calculator provides estimates based on your crypto trades but can’t file your taxes for you. You also won’t be able to export the data to popular tax software applications. Instead, these would be seen as tools to help you estimate your tax costs and put money aside if needed. In some cases, you may need to pay estimated quarterly taxes to avoid a penalty. The data you gather for the tax calculator can help you prepare your estimated taxes.

Similarly, the data you gather can help you prepare your annual tax return. If the data you provide to the calculator matches your tax return, the numbers should be similar. However, if you’re eligible for additional deductions, you won’t find support for this level of detail with capital gains calculators. Expect some variances based on your individual circumstances.

Top Crypto Tax Calculators Reviewed

Several websites provide crypto tax calculators. However, we found pros and cons with each. Overall, the CryptpNews calculator offers the best mix of features for most people, but you may need another calculator for specific use cases. Under the hood, they perform similarly, although some may omit essential details such as state taxes.

Comparison of Popular Tools

Let’s briefly review some of the most popular capital gains calculators, starting with CryptoNews.

1. CryptoNews Free Crypto Tax Calculator

Several standout features include support for all US states, the UK, and Portugal. If you’re from another country, you can also set a custom tax rate. Our tax calculator supports bulk inputs or individual trades. In some cases, the latter may be easier as the trades may be sorted by coin in your exchange trading history. The CryptoNews crypto tax calculator also supports trading fee inputs, providing a more accurate estimate.

2. CoinLedger Crypto Tax Calculator

CoinLedger is best known for its crypto tax software. The calculator provided for estimates offers a clean interface and brings support for filing status, which can affect tax rates in some cases. We did find some features missing, however, including the ability to calculate taxes outside the US or use a custom tax percentage. On the other hand, the calculator supports long and short-term gains on the same form.

3. NerdWallet Capital Gains Calculator

The NerdWallet calculator supports four filing statuses and allows you to choose long or short-term capital gains. We found it to be one of the simpler calculators available, but it was missing some key features. State taxes are not supported, nor are additional countries or custom tax rates. All trades become one bulk input without the ability to add coins individually or assign separate amounts to long or short-term trades.

Features, Pros, and Cons

Below, we compare some of the most popular capital gains tax calculators.

Important Tax Considerations for Crypto Traders

Crypto taxes can be intimidating. As a result, some people put them off, which can be a costly choice. In other cases, people think they don’t need to report their crypto transactions or pay tax on crypto. This can be another costly mistake. Let’s review some of the key tax considerations for crypto traders.

Reporting Crypto Income

As discussed earlier, the IRS views cryptocurrency as property. However, you can’t pay the IRS with Bitcoin, and all transactions must be reported in dollar value. This means receiving crypto from someone else becomes income measured in dollars. Sending crypto to someone else becomes a disposal, much like a sale, with the proceeds reported in the dollar value at the time of the transaction.

Trades and income from decentralized finance (DeFi) protocols are also taxable. Although these platforms typically don’t require Know Your Customer (KYC) identity verification, blockchain records can leave a breadcrumb trail leading back to you.

Keep track of all the crypto wallets you use on or off exchanges so you can pull transaction data. If you have a lot of transactions, you may find tax prep much easier with the help of crypto tax software.

Dealing with IRS Audits

A crypto tax calculator offers a simple estimate of your tax liability for planning purposes or for double-checking the calculations when you file your tax return at the end of the tax year. However, online calculators can’t help in the event of an IRS audit. Keep all your records handy and save the documents used to prepare your tax return.

The best way to survive an IRS audit is to keep accurate records and file a complete tax return without omissions.

Tax Deadlines and Penalties

The annual tax filing deadline in the US is April 15th. However, the IRS generally requires that taxpayers pay 90% of the amount due before the tax deadline. Typically, payroll deductions cover this obligation. If you have a sizable gain, it’s wise to make an estimated tax payment to avoid penalties.

Conclusion

A crypto tax calculator provides a way to estimate your taxes on crypto trades, but choosing one with the features you need is important. The CryptoNews tax calculator offers the best combination of features, including support for all 50 US states, the UK, Portugal, and custom percentages. It’s also one of the only calculators that accounts for trading fees, which can reduce your taxable gains. Try it out at the top of the page.

Final Thoughts and Recommendations

Be complete and accurate in your inputs. Shortcuts, typos, and incomplete data can lead to incorrect estimates. While a tax calculator can’t file your taxes for you, it can help you plan for tax payments and double-check your work when filing your return.

References

• Estimated Income Tax for Estates and Trusts (irs.gov)
• Topic no. 409, Capital gains and losses (irs.gov)
• Digital assets (irs.gov)
• About Form 1040, U.S. Individual Income Tax Return (irs.gov)
• Basics of estimated taxes for individuals (irs.gov)