Crypto Capital Gains: What You Owe and How to Track It

When you sell Bitcoin, trade Ethereum for Solana, or even use crypto to buy a coffee, you might have triggered a crypto capital gains, a taxable profit from selling or exchanging cryptocurrency. Also known as cryptocurrency taxable events, these are the moments the IRS tracks—not your holdings, but what you do with them. It doesn’t matter if you didn’t convert to cash. Trading one coin for another? That’s a sale. Sending crypto to a friend as a gift? That’s a disposal. Even mining rewards get taxed when you sell them. The key is simple: if you made a profit, you owe tax.

Most people think crypto taxes only apply to big wins, but the truth is smaller trades add up fast. If you bought $500 of Dogecoin and sold it for $700, you’ve got a $200 gain. That’s reportable. If you bought $1,000 of Bitcoin in 2020 and sold half in 2024 for $30,000, you’re looking at a $15,000 gain—no matter if you still hold the rest. Crypto tax reporting, the process of documenting all your trades and calculating gains or losses. Also known as crypto tax filings, it’s not optional if you’re in the U.S. The IRS has tools to match exchange data, and audits are rising. You don’t need to be rich to get flagged—you just need to have traded.

Tracking this isn’t magic. Tools like Koinly, CoinTracker, and ZenLedger connect to your wallets and exchanges, pulling every transaction and sorting them by date, price, and profit. They handle FIFO, LIFO, and specific identification methods so you don’t have to guess. But even the best software won’t fix bad records. If you moved coins between wallets without noting the cost basis, you’re stuck estimating—and that’s risky. The best practice? Note every purchase price and date, even if you think it’s too small to matter.

Losses matter too. If you lost money on a trade, you can use it to offset gains elsewhere. Sell a token that dropped 80%? That loss can reduce your taxable gains from Bitcoin or Ethereum. And if your losses exceed your gains? You can deduct up to $3,000 from your regular income each year, rolling the rest forward. This isn’t a loophole—it’s the law. Yet most people miss it because they only focus on what they made, not what they lost.

And yes, this applies to airdrops, staking rewards, and DeFi yields too. Getting free tokens? Taxable at fair market value the day you receive them. Earning interest on your crypto? That’s ordinary income. Selling after? Capital gains on top of it. The IRS doesn’t care if you’re using a decentralized exchange or a centralized one. If it’s on your wallet, it’s taxable.

What you’ll find below are real-world examples from North American traders who’ve been through this. We cover how to handle hard forks, what happens when you lose access to a wallet, why some airdrops are taxed differently, and how to avoid common mistakes that lead to penalties. You’ll see how mining pool fees affect your taxable income, how wrapped tokens like WBTC change your cost basis, and why a simple trade on AstroSwap could trigger a tax event you didn’t expect. No fluff. No theory. Just what actually matters when the tax season hits.