💰 Crypto Tax Loss Harvesting Calculator

📊 Worked Examples

Each row is produced by the calculator's own formula. Note how the same $20,000 loss produces very different dollar savings depending on what other gains you already have.

The third row is the one people misread. When you have no gains to absorb the loss, only $3,000 of it can offset ordinary income each year — the rest carries forward indefinitely. On a $7,000 loss at a 22% bracket, that is $660 saved now plus $4,000 of carryforward, not $1,540.

📖 How Crypto Loss Harvesting Actually Works

1. Crypto is taxed as property, not securities

The IRS has treated virtual currency as property since Notice 2014-21. Every sale, swap, or spend is a taxable disposition with its own gain or loss and holding period. That is what makes harvesting possible: you can deliberately realize a loss on a position, deduct it against other capital gains, and buy the asset straight back.

2. The wash-sale rule — the unresolved question

The wash-sale rule (§1091) disallows a loss if you buy a substantially identical asset within 30 days before or after the sale. It is written for stocks and securities. Because the IRS classifies crypto as property rather than a security, the rule has historically not applied to crypto — which is precisely what made crypto harvesting so attractive. That position is now contested: legislative proposals have repeatedly tried to extend §1091 to digital assets, and the IRS has signalled interest. The prudent assumption for planning is that a re-buy within 30 days may be challenged. If you want certainty, wait 31 days or buy a genuinely different asset — but be aware that waiting exposes you to price movement on the way back in.

3. The re-buy is not free — you lower your basis

This is the part the tables on this site almost never show. If you bought at $60,000, sell at $40,000, and re-buy at $40,000, your basis is now $40,000. You deducted $20,000 of loss today, but when the coin eventually reaches $60,000 you will owe tax on a $20,000 gain you would not have had if you had simply held. Harvesting is a deferral, not forgiveness — it is worth doing when you have gains to offset now and expect to be in a lower bracket, hold until death (step-up in basis), or donate the asset later.

4. Ordering rules decide how much you actually save

Capital losses first offset capital gains of the same character, then the other character, then up to $3,000 of ordinary income, with the remainder carried forward. Short-term losses are more valuable than long-term losses because they offset short-term gains taxed at ordinary rates — up to 37% instead of 20%. If you have a choice of which lots to sell, realize short-term losses first when you have short-term gains to absorb.

5. Watch the 1099-DA reconciliation

Brokers now issue Form 1099-DA for digital asset transactions, and the IRS matches those totals against your return. If you harvest a loss, the proceeds will appear on a 1099-DA even though you re-bought immediately — the sale is real for reporting purposes regardless of the wash-sale debate. Report every disposition and attach Form 8949; a mismatch between the 1099-DA total and your reported proceeds is one of the fastest ways to draw an automated notice.

Pair this with our crypto tax calculator to total your full-year 1099-DA position, and check whether the harvest created a wash-sale question you should raise with your accountant.