Turning your 2018 Bitcoin and Crypto Losses into Tax Savings

Please speak to your own tax expert, CPA or tax attorney on how you should treat taxation of digital currencies.

In other words, you can leverage your crypto losses to save money on your tax bill.

Now let's say that you also invested in Bitcoin this year: You bought $1000 worth of Bitcoin and saw that investment fall in value to $600. You sold your Bitcoin and at this price and realized a $400 capital loss.

Your $400 loss on Bitcoin offsets your $400 gain in the stock market, therefore you no longer have a capital gain liability, meaning you pay no taxes on gains for your tax bill.

It is wise to file these capital losses with your yearly tax return to reduce your taxable income and save money.

Depending on how heavy your losses are, you could be saving a significant amount of money by properly filing your losses-especially if you have other capital gains to offset from a traditional stock portfolio.

To complete your 8949, you need to list the amount of crypto traded, the traded price, the date traded, the cost basis for the trade, and the capital gain or loss that you incurred for every trade you made during the year.

If you haven't been keeping a clean record of the dates of your trades, the US dollar value amounts that you bought and sold your crypto for, and the capital gains and losses from those trades, then the process for filling the 8949 form can become a headache.

While having a good CPA is important, most of the CPA firms use these same automated crypto tax services to do the intense capital gains and loss calculations.

One "Money-saving" option is to handle your crypto gains and loss calculations yourself by using crypto tax software, and then give this data over to your traditional CPA, or directly upload it to a site like TurboTax.