Filing your Crypto Taxes with EasyTaxUSA

Navigating the complexities of the U.S. federal income tax system can feel like traversing a labyrinth, and adding cryptocurrency to the mix can make it even more challenging. As we look towards the 2026 tax filing season, understanding how your crypto taxes and activities and ensuring you maximize your tax return from crypto investment is crucial. Fortunately, EasyTaxUSA.com is designed to simplify this process, offering an easy way to e-file your taxes online, even when they involve digital assets.

The U.S. imposes a progressive federal income tax system with seven rate brackets, ranging from 10 percent to 37 percent. The highest rate of 37 percent applies to individual income exceeding certain thresholds. As we approach the 2026 tax year, significant discussions around tax legislation are expected, influenced by the outcome of the November 2024 elections, particularly because over $4 trillion of tax increases are scheduled to take effect at the end of 2025 due to the scheduled expiration of many Tax Cuts and Jobs Act (TCJA) provisions. While these broader changes impact all taxpayers, those involved in cryptocurrency need to pay specific attention to how these digital assets are treated under current tax law and how that might interact with the changing landscape.

For federal tax purposes, cryptocurrency is generally treated as property. This is a fundamental concept for understanding how gains and losses are taxed. You are typically treated as selling or exchanging property when you sell, exchange, or otherwise dispose of cryptocurrency. The gain or loss resulting from this disposition is usually a capital gain or loss.

The classification of this capital gain or loss as either short-term or long-term depends on how long you held the cryptocurrency before disposing of it. If you held the asset for one year or less, any gain or loss is considered short-term. If you hold it for more than one year, it’s considered long-term. This distinction is incredibly important for your tax liability. 

Short-term profits or capital gains are taxed as ordinary income at your marginal tax rate. If you are in the 37 percent ordinary income bracket, your short-term gains will be taxed at 37 percent. In contrast, long-term profits or capital gains are subject to preferential tax rates of 0 , 15%, or 20%, depending on your filing status and taxable income.

If you have multiple capital asset transactions during the year, including cryptocurrency, you must net your gains against your losses. Short-term gains are netted against short-term losses and long-term gains are netted against long-term losses. Then, your net short-term result is netted against your net long-term result. If you end up with a net capital loss (either short-term or long-term), you can deduct up to $3,000 of that loss ($1,500 if married filing separately) on your tax return. Any excess investment loss over this limit can be carried forward to subsequent tax years. EasyTaxUSA.com helps you navigate these netting rules accurately and apply the capital loss limitation and carryforward rules correctly.

Beyond selling or exchanging crypto, other activities can generate taxable income. The IRS has indicated that income from activities unique to cryptocurrency, such as hard forks and airdrops, is taxable as ordinary income in the year of receipt based on the fair market value (FMV). Similarly, the FMV of cryptocurrency received as a reward from mining or staking activities must be included in your gross income upon receipt. Using a decentralized exchange (DEX) to exchange one cryptocurrency for another is taxable. 

EasyTaxUSA.com provides guidance on accurately reporting these various types of cryptocurrency income on your tax return.

Maximizing your tax return with cryptocurrency involves strategic planning and meticulous recordkeeping. One crucial aspect is determining the cost basis of the cryptocurrency you dispose of. Unlike traditional investment assets, which often default to First-In, First-Out (FIFO), the IRS has indicated that the specific identification method commonly used for stock and securities dispositions may be applied to cryptocurrency. This means you can choose which particular units of a cryptocurrency you are selling, allowing you to select higher-basis units to reduce your taxable gain or increase your tax loss. While brokers often default to FIFO for stocks, you can instruct your broker to use an alternative method or select specific lots. For cryptocurrency, you are responsible for tracking this yourself. Maintaining adequate records to support the intended treatment is essential if you use particular identification. 

EasyTaxUSA.com can help you understand how different cost basis methods impact your gain or loss, and facilitate the reporting based on your chosen method and records.

Another strategy for maximizing your tax position is tax loss harvesting. This involves selling assets that have decreased in value to realize a capital loss, which can then be used to offset capital gains and potentially up to $3,000 of ordinary income. A significant difference between cryptocurrency and other investment assets like stocks is that cryptocurrency is not subject to specific tax rules, such as the wash sale rules. The wash sale rule prevents you from claiming a loss on a security if you buy a substantially identical security or crypto within 30 days before or after the sale. The inapplicability of this rule to cryptocurrency may present tax planning opportunities that are not available to other investment asset classes. 

EasyTaxUSA.com assists in calculating your capital gains and losses and helps you understand how realized losses can be used to reduce your tax liability.

High-income taxpayers with significant investment income, including capital gains, may also be subject to the 3.8% Net Investment Income Tax (NIIT). This tax applies to the lesser of your net profit from investment income or the amount by which your modified adjusted gross income (MAGI) exceeds certain thresholds based on your filing status. EasyTaxUSA.com incorporates the rules for the NIIT to accurately calculate your total tax liability, ensuring you account for this potential additional tax.

Furthermore, suppose you have significant income from cryptocurrency activities that are not subject to withholding (like self-employment income from mining or significant investment gains). In that case, you may be required to pay estimated taxes quarterly to avoid penalties. EasyTaxUSA.com can help you calculate the appropriate estimated tax payments and understand the requirements, such as paying at least 100% of the prior year’s tax liability (or 110% for certain high-income taxpayers).

The 2026 tax season will also see the implementation of new reporting requirements, with Form 1099-DA reporting expected to begin for cryptocurrency transactions. While this aims to provide more transparency, taxpayers will still be responsible for accurately reporting all their crypto activities, especially those not captured by a 1099 (like peer-to-peer transactions or activities on foreign platforms). Staying informed about these changes is vital, and EasyTaxUSA.com is designed to help you incorporate this new reporting into your filing process. While the IRS is expanding its Direct File program in 2025 to allow eligible taxpayers in 24 states to file directly for free, services like EasyTaxUSA.com offer broader support for more complex situations, including extensive cryptocurrency transactions, ensuring accuracy and helping you identify all eligible deductions and strategies.

EasyTaxUSA.com is built to demystify the tax implications of cryptocurrency

The platform guides you step-by-step through reporting all your crypto transactions, from sales and exchanges to income from mining, staking, and airdrops. It performs the complex calculations required for capital gains and losses, helps you apply netting rules, and assists in determining the most advantageous cost basis method for your situation.

EasyTaxUSA.com takes the stress out of reporting your digital asset activities, allowing you to file your taxes with confidence and maximize your tax return by providing a user-friendly interface and accurate calculations. The platform’s design helps ensure you claim all the deductions and credits you are eligible for, both related to your crypto activities and your overall tax situation, regardless of the potential legislative changes or expiring provisions like those from the TCJA.

In conclusion, navigating taxes with cryptocurrency can seem overwhelming due to the complex rules regarding property treatment, capital gains, ordinary income events, and necessary recordkeeping. However, it doesn’t have to be. 

EasyTaxUSA.com provides an intuitive and comprehensive platform that simplifies e-filing your taxes, including those involving cryptocurrency

By guiding you through each step, handling calculations, and helping you apply beneficial tax strategies like specific identification and tax loss harvesting, EasyTaxUSA.com makes managing your crypto taxes easy and enables you to maximize your tax return.

Don’t let the complexities of cryptocurrency taxation add unnecessary stress to your 2026 filing season. Choose EasyTaxUSA.com for an easy, accurate, and confident way to e-file your taxes online. Visit EasyTaxUSA.com today to get started and take control of your cryptocurrency tax reporting.

This entry was posted on Thursday, May 8th, 2025 at 8:00 am and is filed under Tax and Life Changes, Tax Deadlines, Tax for Business, Tax News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.