Do I have to report crypto on my taxes if I lost money?

Do I owe taxes on crypto if I lost money? 

No, you don't owe taxes if you lost money on crypto. However, you’re still required to report these transactions on your tax return. 

Remember, crypto losses can actually reduce your tax bill. 

How can I use crypto losses to reduce my taxes? 

When you sell cryptocurrency at a loss, it can be used to reduce an unlimited amount of capital gains from cryptocurrency, stocks, and other investments as well as $3,000 of ordinary income (such as income from your job). Additional losses can be rolled over into future tax years.

Because of these tax benefits, some investors intentionally sell at a loss to reduce their tax bill. This is a strategy known as tax-loss harvesting. 

Can I claim crypto losses if I don’t sell? 

Remember, you must ‘realize’ your cryptocurrency loss to claim it on your tax return. That means you must sell, trade away, spend, or otherwise dispose of your cryptocurrency. 

You won’t be allowed to claim a cryptocurrency loss if you are still holding your crypto. 

Is there a limit to how much crypto losses I can claim? 

Crypto losses can offset an unlimited amount of capital gains and up to $3,000 of net income for the year. Any additional losses can be rolled forward to future tax years. 

What if I lost value in a theft or a hack? 

Since 2017, losing crypto in a theft or a hack is no longer considered tax deductible. 

Are crypto losses reported to the IRS?

Starting in 2026, centralized exchanges like Coinbase will be required to report your capital gains and losses to the IRS on Form 1099-DA. 

How do I report crypto losses on Form 8949? 

You report crypto losses on Form 8949 and Schedule D of your tax return. The process is straightforward but requires detailed records of each transaction.

Reporting losses step-by-step

1. Calculate each loss: For every crypto transaction where you lost money, you need the date you bought your crypto, the purchase price (cost basis), the date you sold it, and the sale price.

2. Fill out Form 8949: This form lists every crypto transaction. You'll enter each disposal of crypto separately with the relevant dates and amounts, along with the relevant gain/loss. 

3. Transfer to Schedule D: Copy your net gain/loss for the year onto Schedule D. 

What records do I need to file my crypto taxes? 

Here’s what you’ll need to report your crypto losses to the IRS: 

• Transaction dates (when you bought and sold)
• Amount of crypto involved
• Fair market value in USD at the time of each transaction
• Cost basis (what you originally paid for your crypto)
• Type of transaction (sale, trade, payment)

How crypto tax software can help 

Need help reporting your cryptocurrency losses to the IRS? CoinLedger can help. 

CoinLedger can connect to your wallets and exchanges and help you generate a complete tax report in minutes. 

Get started for free.