.jpg)
- What are exchange fees?
- Are exchange fees tax deductible?
- How capital gains tax is calculated
- How exchange fees can reduce your capital gains
- Can transfer fees reduce capital gains?
- Do the same rules apply for network/gas fees?
- How do I report exchange fees on my tax return?
- How to report exchange fees on your tax return
- Simplify your crypto tax reporting
- Frequently asked questions
Did you pay exchange fees this tax year?
If the answer is yes, you may be able to use your fees to reduce your tax liability.
In this guide, we’ll break down everything you need to know about how exchange fees are taxed and show you an easy way to include fees on your tax return.
What are exchange fees?
Cryptocurrency exchanges often charge their users fees for buying, selling, and transferring their cryptocurrency. Major exchanges like Coinbase, Gemini, and Kraken use these exchange fees to support their business.
Are exchange fees tax deductible?
Businesses can write off exchange fees if they are a necessary expense. However, exchange fees cannot be treated as an itemized deduction for individuals.
However, exchange fees directly related to a trade can be added to your cost basis or subtracted from your gross proceeds, which can potentially reduce your capital gains tax.
How capital gains tax is calculated
To better understand the tax benefits of exchange fees, let’s review the basics of how capital gains tax is calculated.
Typically, crypto investors incur a capital gain or loss when they dispose of their cryptocurrency. To determine their capital gain on these transactions, investors can use the following formula:
Capital gain/loss = Gross Proceeds - Cost Basis
In this formula, gross proceeds is the amount you receive when you dispose of your cryptocurrency. Meanwhile, cost basis is the amount you originally paid for the cryptocurrency.
.jpeg)
For more information on how cryptocurrency taxes are calculated, check out our complete guide to cryptocurrency taxes.
How exchange fees can reduce your capital gains
Paying exchange fees for buying cryptocurrency
Any exchange fees that you pay when you buy cryptocurrency can be added to your cost basis. This can reduce your capital gain or increase your capital loss in the case of a future disposal.
.jpeg)
Paying exchange fees for selling cryptocurrency
Any exchange fees that you pay when you sell cryptocurrency can be subtracted from your gross proceeds. This can reduce your capital gain or increase your capital loss.
.jpeg)
Can transfer fees reduce capital gains?
In the past, the IRS has said that fees can only be added to cost basis or subtracted from gross proceeds in the following scenarios.
1. They are directly related to buying and selling.
2. They increase the underlying value of the asset.
Since transfer fees don’t fall into either category, it’s reasonable to assume that fees for transferring cryptocurrency from one wallet or another do not reduce an individual taxpayer’s liability.
However, businesses may be able to write off transfer fees as an expense if wallet-to-wallet transfers are a necessary part of their operations.
‍
Frequently asked questions
How we reviewed this article
All CoinLedger articles go through a rigorous review process before publication. Learn more about the CoinLedger Editorial Process.

CoinLedger has strict sourcing guidelines for our content. Our content is based on direct interviews with tax experts, guidance from tax agencies, and articles from reputable news outlets.