Understanding Cryptocurrency Taxes In 2025

If you're a crypto investor, the current bull run may have you considering taking profits. While realizing gains can be exciting, it’s important to think about the tax implications before making any moves. Here are some tax planning ideas to help minimize your capital gains tax liability: 1. **Hold for Over a Year**: If possible, hold your crypto assets for at least one year before selling. Long-term capital gains are generally taxed at a lower rate (0%, 15%, or 20%) compared to short-term gains, which are taxed as ordinary income. 2. **Offset Gains with Losses**: If you have other crypto or investment losses, consider selling those assets to offset your gains. This strategy, known as tax-loss harvesting, can help reduce your taxable income. 3. **Consider Tax-Advantaged Accounts**: If you’re investing in crypto through a tax-advantaged account like a self-directed IRA, any gains might grow tax-deferred or even tax-free (if it’s a Roth account). 4. **Donate Crypto**: Donating appreciated crypto assets to a qualified charity can provide a tax deduction for the fair market value while avoiding capital gains tax on the appreciation. 5. **Strategic Selling**: Spread out your crypto sales across multiple tax years to potentially keep your income in a lower tax bracket. 6. **Leverage Gifting**: You can gift crypto to family members in lower tax brackets, staying within the annual gift tax exclusion limit ($17,000 per recipient in 2024). They may pay lower capital gains tax when they sell. 7. **State Tax Planning**: If you live in a state with high income taxes and are planning a move to a state with no or low income tax, consider waiting until after your move to sell your crypto. 8. **Stay Compliant with Reporting**: The IRS is increasing scrutiny on crypto transactions, especially with new reporting requirements like Form 1099-DA starting in 2025. Ensure all your transactions are accurately tracked and reported to avoid penalties. Crypto tax planning can get complex, especially if you have significant transactions or use DeFi, NFTs, or other advanced crypto strategies. If you need help navigating the tax implications of your crypto investments, let’s connect! Our team specializes in crypto tax planning and compliance, and we’re here to help you make the most of your gains. #cryptotax #taxplanning #cryptoinvestment #capitalgainstax #cryptocpa

There are rumors spreading online that IRS Notice 2025-7 delays the new crypto tax rules under Rev. Proc. 2024-28. Spoiler: It doesn’t. 🧐 What IRS Notice 2025-7 Actually Does: This notice provides transitional relief for changes to cost basis rules. Instead of requiring you to tell your broker upfront which cost basis method you’re using before making a trade, you can track and record this information on your own books at the time of the trade—no need to pre-identify it with your broker. This is a temporary adjustment to help both taxpayers and brokers get used to the new cost basis reporting requirements. 🚨 What’s NOT Changing: Rev. Proc. 2024-28 still took effect January 1, 2025. The switch from the universal wallet method to the wallet-by-wallet allocation method is happening as planned. Taxpayers must track gains and losses separately for each wallet—no more aggregating transactions across all wallets. What you should do right now: 1️⃣ Get familiar with the wallet-by-wallet tracking method. 2️⃣ Start your 2024 crypto taxes without delay, and ensure prior years are reported accurately, as well. 3️⃣ Stop relying on rumors. Start relying on facts. Crypto tax rules are evolving fast. Staying informed isn’t optional—it’s essential. Reach out if you have any questions!

𝐓𝐡𝐞 𝐈𝐑𝐒 𝐇𝐚𝐬 𝐚 𝐍𝐞𝐰 𝐅𝐨𝐫𝐦 𝐟𝐨𝐫 𝐂𝐫𝐲𝐩𝐭𝐨 𝐚𝐧𝐝 𝐍𝐅𝐓 𝐒𝐞𝐥𝐥𝐞𝐫𝐬! Have you ever wondered how your crypto or NFT sales get reported to the IRS? Starting with the 2025 tax year, the IRS will usher in a brand‑new reporting form - Form 1099‑DA (Digital Asset Proceeds From Broker Transactions) - to standardize how digital assets are reported by brokers, exchanges, and hosted wallet providers 𝐖𝐡𝐚𝐭 𝐘𝐨𝐮 𝐒𝐡𝐨𝐮𝐥𝐝 𝐊𝐧𝐨𝐰: 𝐖𝐡𝐨’𝐬 𝐫𝐞𝐬𝐩𝐨𝐧𝐬𝐢𝐛𝐥𝐞: Brokers, platforms like Coinbase or Gemini, and similar intermediaries must issue Form 1099‑DA for each digital asset sale or exchange beginning Jan 1, 2025 𝐖𝐡𝐚𝐭 𝐠𝐞𝐭𝐬 𝐫𝐞𝐩𝐨𝐫𝐭𝐞𝐝: Expected details include gross proceeds, dates of transaction, asset types (like crypto or NFTs), number of units, and possibly cost basis and gain/loss - depending on the broker's capabilities. 𝐖𝐡𝐲 𝐢𝐭 𝐦𝐚𝐭𝐭𝐞𝐫𝐬: This form aims to bring the same clarity and consistency to crypto reporting that stocks enjoy with Form 1099‑B to help both taxpayers and the IRS reduce errors and improve compliance. 𝐖𝐚𝐭𝐜𝐡 𝐟𝐨𝐫 𝐜𝐨𝐦𝐩𝐥𝐞𝐱𝐢𝐭𝐲: Because brokers vary in data tracking (especially for assets acquired before 2026 or moved through decentralized exchanges), some fields may be blank, leaving you responsible for calculating and reporting your own cost basis and gains. 𝐖𝐡𝐲 𝐓𝐡𝐢𝐬 𝐌𝐚𝐭𝐭𝐞𝐫𝐬 𝐭𝐨 𝐘𝐨𝐮: • Expect a 1099‑DA landing in your mailbox (and the IRS’s), if you’ve sold or exchanged digital assets through a broker. • Verify your records carefully - especially if cost basis isn’t listed. • The IRS could ramp up audits in this area as reporting becomes more standardized. If you're using non-custodial wallets or decentralized platforms that don’t issue 1099-DA, you’re still on the hook for reporting your crypto transactions correctly. How do you see digital assets fitting into personal finance in the next five years? #incometaxes #financialliteracy