Top 10 crypto tax tips for 2024

We’re here to help with the top 10 best crypto tax tips for you to succeed this crypto tax season!

From understanding exactly how cryptocurrencies are taxed to keeping proper records of your trades, discover the top tips to have a smooth crypto tax season!

Let’s jump into it!

Tip 1: Understand How Crypto is Taxed

In the US, cryptocurrencies are viewed as property and taxed under capital gains and income taxes, depending on the type of taxable events.

Investors can engage in several taxable events in their crypto tax journey, including:

• Trading cryptocurrencies
• Trading crypto for other crypto
• Trading any cryptocurrencies for FIAT (e.g., USD)
• Trading NFTs for other cryptocurrencies, NFTs, of FIAT (e.g., USD)
• Earning staking rewards
• Receiving a salary in cryptocurrencies
• Earning income through a crypto airdrop
• Receiving new coins from a hard fork
• Earning crypto interest
• Earning any type of DeFi income
• Selling NFTs as a digital creator

Investors need to track their gains/losses on some of these taxable events (e.g., trading crypto/NFTs) and determine their income from other transactions (e.g., airdrops, staking, interest salaries).

Crypto is taxed in most countries

Not only the US taxes cryptocurrencies, but most developed countries tax the trading of cryptocurrencies. Let’s look at the main ways in which crypto is taxed. 

Crypto taxes in the UK

The UK taxed cryptocurrencies at a capital gains level, with the tax rate for each investor depending on its total income tax bracket.

Earning crypto income, NFTs, and other popular crypto transactions like DeFi are also taxed. Check our UK crypto tax guide for more information.

Crypto taxes Australia

Australia taxes cryptocurrencies based on the type of investor you are (e.g., frequency/type of trade), with most people falling under the category of investor.

In that case, investors are taxed at a capital gains tax level for most crypto transactions, but they also have benefits like a 50% discount on their capital gains taxes if they hold crypto for over one year before selling.

Crypto taxes in Canada

Canada taxes cryptocurrencies similarly to Australia, where investors are taxed at a capital gains level (while traders are taxed differently). Investors will face their federal income tax rate for profits but can enjoy a 50% discount on their gains. Discover more in our Canada crypto tax guide.

Tip 2: Adapt to ever changing crypto tax laws

Crypto taxes frequently change across countries. The US, as the most advanced crypto economy, regularly updates investors on how to address new crypto trends, from NFTs to DeFi and staking.

Other countries like the UK, Germany, and Australia also update their crypto tax rules frequently. Investors across countries should pay attention to the changes that may apply to them or work with a professional who can guide them through the highlights.

Tip 3: Liquidity is king

In a year where crypto markets are more volatile than ever, you may incur taxable events that lead to big losses or significant gains. If you have big gains in a year but then suffer large losses the following year, you may not have enough liquidity to pay crypto taxes when they are due the next year.

Our top tax tip is to carefully plan your trades and put aside money for crypto taxes to avoid bigger issues when the crypto tax season comes.

Tip 4: Manage crypto losses (and reduce your crypto taxes)

There are many legal ways to save on your crypto taxes in the US and other countries.

The end of the year is a great period to evaluate your portfolio, look at winners/losers, and establish if it is advantageous to realize losses from coins that may not recover. This way, investors can reduce their capital gains taxes by deducting those losses from their other gains. This is called crypto tax loss harvesting.

It could be more advantageous to realize those losses and save on taxes than hoping to have a coin in your portfolio recover and pay more taxes.

Tip 5: Employ tax saving strategies around year-end

Beyond crypto tax loss harvesting, there are more ways to reduce crypto taxes by optimizing how you manage your portfolio. 

Here are some of the most popular crypto tax saving strategies in the US:

• Wash sale rule
• Donating crypto to a charitable organization and deducting that contribution
• Holding crypto in the long term and paying a lower capital gains tax rate
• Move to an income tax-free state and pay fewer taxes

Tip 6: Account for taxes and security amid a crypto summer

Many experts believe that this year will be a crypto summer.

Our main advice this year is to plan ahead on your crypto taxes and pay special attention to security. If you have gains, please account for crypto taxes in 2025 and be extra careful about how you store your coins.

Tip 7: Be wary of crypto-tax-friendly locations

Some countries that were tax havens for crypto investors have introduced new crypto taxes recently, changing the entire landscape for people who moved with this goal in mind. Examples of this are Italy and Portugal, which recently changed their crypto laws.

We encourage you to be on top of the news and consult with your crypto tax professional when changes come into law to guarantee that you’re fully prepared for any situation. If you’re in Portugal and need to be on top of changes about crypto taxes, check our crypto tax guide for Portugal.

Tip 8: Always keep updates records of your transactions

With many exchanges getting shut down or going through bankruptcy, it’s crucial to keep records. Make it a habit to regularly download and save your transaction history records.

Remember, if you don’t keep good records, you will likely need to pay a lot more taxes than you should because the IRS rule will assume a cost basis of zero if you can’t prove it with a purchase record.

Tip 9: Use crypto tax software

The easiest way to keep proper records of your crypto trades is to upload them to crypto tax software.

Crypto tax tools like CoinTracking can help manage your portfolio, track all of your gains/losses and income, and generate the right tax reports to file your crypto taxes.

CoinTracking supports over 300 of the most popular crypto exchanges, blockchain networks, wallets, DeFi protocols, and much more!

Tip 10: Companies and professionals need institutional-like tools to manage crypto

With new regulations worldwide, there are more compliance laws that crypto providers and players need to follow.

We advise any companies, crypto native or not, to carefully handle their crypto dealings, reach out to professionals, and start using professional tax tools designed for businesses like CoinTracking to start their tax and compliance crypto journey.

Conclusion

Crypto is an ever-changing world, with investors having to pay close attention to all news and trends.

From changing regulations to keeping proper records of trades and using crypto tax software, now you know the top tips to succeed with crypto taxes.

CoinTracking can help you by enabling importing from hundreds of options and generating the reports you need. For more help, check out our Full-Service, where you can get your crypto taxes done for you (100% hands-off).

Disclaimer: All the information provided above is for informational purposes only and should not be considered as professional investment, legal, or tax advice. You should conduct your own research or consult with a professional financial advisor when investing.