Reporting Crypto Losses and Carryovers for Future Years

Understanding Crypto Losses

First, let’s talk about what it means to have a loss in cryptocurrency. A loss occurs when you sell, trade, or dispose of your crypto for less than you originally paid for it. This can happen due to market fluctuations, where the value of cryptocurrencies can change dramatically in a short period.

Reporting Crypto Losses

When you experience a financial loss in cryptocurrency transactions, you can report these losses on your tax return, similar to losses in stocks or other investments. This is done in countries like the United States and many others where crypto is considered a capital asset by tax authorities.

To report a loss: