If you lost money in cryptocurrency this year, there’s a bit of good news. You can claim that loss on your taxes. erinarvedlund breaks down your options.
If you lost money in cryptocurrency this year, there’s a bit of good news. You can claim that loss on your taxes.
However, you can claim crypto losses and offset gains in your portfolio, say Philadelphia-area accounting experts.That’s because the Internal Revenue Service treats crypto as property, just like stocks or real estate, according to tax expert Elisabeth Felten, assistant professor of business at DeSales University.
. That is, taxpayers are limited to a $3,000 capital loss, which you can use to offset other income, and losses greater than $3,000 can be carried forward indefinitely and used to offset income on future tax returns.More good news for crypto investors: there’s a loophole around what’s called the “wash sale” rule.
But for now “no such rule applies to crypto, as the IRS classifies crypto as property and not a security,”That means “an investor can do what is called ‘tax-loss harvesting’ — sell their position in cryptocurrencies for a loss, then repurchasing right away,” Felten explained.
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