Crypto investing is risky — and if you’ve lost money, you’re not alone. The good news? You can turn that loss into a win by reducing your taxes. This guide shows exactly how to report crypto losses on U.S. taxes in 2025, what forms to use, and how it can help you save thousands.
What Counts as a Crypto Loss?
Before you can report crypto losses on U.S. taxes in 2025, you need to know what counts:
- Selling crypto for less than you paid
- Trading one crypto for another at a loss
- Spending crypto that’s dropped in value
- NFTs or tokens that became worthless
If any of these happened in 2025, you likely have a capital loss you can report.
How Crypto Taxes Work in the U.S.
In the U.S., the IRS treats crypto as property — not currency. That means when you sell, trade, or spend it, it’s a taxable event.
If you report crypto losses on U.S. taxes in 2025, they count as capital losses and reduce your taxable income — just like stock losses.
You can use your crypto losses to:
- Offset crypto gains
- Offset stock market gains
- Deduct up to $3,000 from regular income
This is why learning how to report crypto losses on U.S. taxes in 2025 is so important — it could save you real money.
Step-by-Step: How to Report Crypto Losses on U.S. Taxes in 2025
Let’s walk through how to report your crypto losses on your 2025 tax return:
Step 1: Gather Your Crypto Transaction History
Download your full trade and wallet history from exchanges like Coinbase, Binance, or Kraken. You need the date, price, and amount of every crypto transaction.
To report crypto losses on U.S. taxes in 2025, make sure you have:
- Date you bought
- Date you sold
- Price at buy/sell
- Total gain or loss
Step 2: Use a Crypto Tax Software (Optional but Helpful)
Platforms like CoinLedger, Koinly, or ZenLedger make it easy to calculate your crypto taxes. They track your profits and losses automatically.
If you’re trying to report crypto losses on U.S. taxes in 2025 manually, make sure your calculations are exact — the IRS expects accuracy.
Step 3: Fill Out IRS Form 8949
Use Form 8949 to report each individual crypto transaction with a gain or loss. You’ll list:
- Type of asset (e.g., Bitcoin, Ethereum)
- Purchase/sale dates
- Buy/sell amounts
- Gain or loss
To correctly report crypto losses on U.S. taxes in 2025, separate short-term (held under 1 year) and long-term (over 1 year) losses.
Step 4: Transfer Totals to Schedule D
Once Form 8949 is filled, total your gains and losses and enter them on Schedule D of your tax return. This is where the IRS sees your final capital loss.
Remember, if you have more than $3,000 in net losses, you can:
- Deduct $3,000 this year
- Carry over the rest to future years
That’s a huge reason to always report crypto losses on U.S. taxes in 2025, even if you think they won’t help now.
Can You Report Lost or Hacked Crypto?
If you lost access to your wallet or got hacked, can you still report crypto losses on U.S. taxes in 2025?
Sadly, the IRS does not allow deductions for lost or stolen crypto. You can only report realized losses — like when you sell or trade at a loss. If you still hold a worthless coin or NFT, you may have to sell it for near $0 to claim the loss.
Common Mistakes When Reporting Crypto Losses
Avoid these issues when you report crypto losses on U.S. taxes in 2025:
- Forgetting to include all transactions
- Reporting losses from coins still in your wallet
- Mixing up short- and long-term losses
- Not backing up transaction records
Being accurate and complete will keep you safe from IRS penalties.
Why Reporting Crypto Losses Is Smart (Even If You Didn’t Gain)
Even if you had no gains in 2025, you should still report crypto losses. Why?
- You can carry forward unlimited losses
- You may offset future profits
- You avoid IRS red flags by being honest
By knowing how to report crypto losses on U.S. taxes in 2025, you position yourself for future savings.
How the IRS Tracks Crypto Losses
The IRS uses Form 1099 from exchanges to track crypto sales. Even if you didn’t get one, you’re still required to report losses.
If you sold on a decentralized exchange (DEX) like Uniswap, it’s your job to report crypto losses — no one else will do it for you.
Conclusion: Don’t Throw Away Your Crypto Losses
You might not have had the best crypto year in 2025. However, you can convert those red numbers into actual tax advantages by learning how to report cryptocurrency losses on U.S. taxes.
It’s lawful. It’s clever. Additionally, you might save thousands.
FAQs
Q1: Do I have to report crypto losses on my taxes?
Yes — if you sold crypto for less than you bought it, you must report crypto losses on U.S. taxes in 2025.
Q2: Can I deduct all of my crypto losses in one year?
Only up to $3,000 of net losses can be deducted from income. The rest rolls over.
Q3: Do I need to report if I didn’t make any money?
Yes — if you had losses, you can report them to reduce future tax bills.
Q4: What form do I use to report crypto losses?
Use IRS Form 8949 and Schedule D to report crypto losses on your 2025 return.
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