u/BedMaximum4733

Not sure how many people know this but I genuinely didn't until recently so figured I'd share.

I was stressed about taxes this year because I sold some index funds earlier in the year and had like $18,000 in capital gains. I'd been putting off dealing with it because I knew I was going to owe a decent chunk.

But then I remembered I also have a pile of altcoins that are absolutely cooked. Down like $20,000 on some stuff I bought in 2021 when I thought I was a genius.

Turns out if you sell those losing crypto positions before December 31, those losses offset your capital gains from other assets. Not just crypto gains — any capital gains. Stocks, ETFs, real estate, doesn't matter. The IRS treats them all in the same bucket.

So I sold my red positions, realized the losses, and my net capital gains for the year basically zeroed out. Would've owed maybe $4,000 in taxes otherwise.

And here's the part that actually blew my mind: if your losses are bigger than your gains, you can deduct up to $3,000 of those leftover losses against your regular income. Anything beyond that carries forward into next year. You don't lose it.

I'm probably being paranoid about all this but I've seen enough people in crypto circles get surprise letters that I'd just rather deal with it proactively.

Used CoinLedger to figure out which positions to sell in what order because I'm lazy, but honestly you could do this with a spreadsheet. Other tax software works too. The core idea is free.

Might save you a few thousand bucks before year end. Just figured people here might not know.

TL;DR: Crypto losses can offset capital gains from stocks and any other assets, plus up to $3k of regular income. If you're sitting on losers, selling before Dec 31 can actually save you real money.

Saw a bunch of posts hyping crypto arbitrage as easy money and went down the rabbit hole myself a few months ago. Figured I'd share what I ran into before someone else learns it the annoying way.

The strategy itself is rough. I spotted BTC about $300 cheaper on one exchange than another, bought it, went to move it over, and by the time the transfer confirmed the gap was basically gone. Between trading fees on both sides and the withdrawal fee, my "free" $300 turned into a small loss. That part is at least well documented if you dig.

But the thing nobody mentioned: every one of those sells is a taxable event. Doesn't matter that I was just shuffling the same money around trying to catch a spread. Each time you sell or swap, that's a disposal, and you owe capital gains on it. And since I'm holding for like ten minutes, it's a short-term gain, which gets taxed as ordinary income, not the lower long-term rate.

So picture doing this fifty, a hundred times a month. That's a hundred separate taxable events I now have to track and report, on margins that were razor thin to begin with.

I ended up dumping all my exchange accounts into CoinLedger because reconciling that by hand was a nightmare, but you can export the CSVs and do it manually too if you're patient. Just know what you're signing up for.

I'm not saying don't do it. Just that the tax and fee math is way uglier than the YouTube videos make it sound, and I wish I'd known before I started.

TL;DR: Crypto arbitrage profits are taxable, every trade is a separate taxable event, and short holds mean short-term gains taxed as ordinary income. Track everything.

Been putting this off for years and finally caved last weekend, figured I'd share in case anyone else is sitting on the same low-key anxiety.

So starting this year, US exchanges like Coinbase have to report your crypto sales to the IRS on a new form called the 1099-DA. For now it's just the gross proceeds, basically what you sold for, not your actual gain. Cost basis gets added for 2026 sales, so they'll have the full picture soon enough. Either way, the "they'll never know" era is pretty much ending.

What actually got me though wasn't even the selling. I had a bunch of crypto-to-crypto swaps from a couple years back, swapping ETH into some alts during the last run. I genuinely didn't realize every one of those swaps is a taxable event. You don't have to cash out to USD to owe tax. Trading one coin for another counts as a disposal, and you owe on the gain at that moment. That was the part that messed up my numbers.

I'm probably being paranoid since I'm not exactly a whale, but with the form going out now I just didn't want it hanging over my head anymore. My coworker got one of those IRS letters two years ago over some Coinbase stuff and it was a whole headache, so that was in the back of my mind.

I ended up using CoinLedger to pull all my wallets and exchanges together because doing three years of swaps by hand was not happening. You can do it manually with a spreadsheet if your activity is simple, and there are other tools too, but I was being lazy and just wanted it done.

Anyway. Not telling anyone what to do with their own stuff. Just figured if you've got old swaps you forgot about, this is the year to actually look at it.

TL;DR: Crypto-to-crypto swaps are taxable even if you never cash out, and exchanges start reporting your crypto sales to the IRS via 1099-DA this year.