Calculate capital gains tax and crypto taxes for US investments
The United States has one of the most complex investment tax systems globally, with different rates for various investment types and holding periods. Understanding these rules is crucial for maximizing your investment returns and staying compliant with IRS regulations.
The US distinguishes between short-term and long-term capital gains, with significantly different tax treatments. Short-term gains (assets held for one year or less) are taxed as ordinary income, while long-term gains benefit from preferential rates.
The IRS treats cryptocurrency as property, meaning every crypto transaction is a taxable event. This includes trading one cryptocurrency for another, using crypto to purchase goods or services, and converting crypto to fiat currency.
While the US doesn't have a formal "registration" system for individual investors, the distinction lies in proper tax reporting and compliance. Registered investors maintain detailed records and file appropriate tax forms, while unregistered investors may face penalties and audit risks.
In addition to federal taxes, most US states impose their own capital gains taxes. States like Florida, Texas, and Nevada have no state income tax, making them attractive for investors. High-tax states like California can add significant tax burden to investment gains.
Effective tax planning can significantly reduce your investment tax burden. Consider strategies like tax-loss harvesting, holding investments for over one year to qualify for long-term rates, and utilizing tax-advantaged accounts.
Important: Tax laws are complex and change frequently. This calculator provides estimates based on current rates. Always consult with a qualified tax professional for personalized advice on your specific situation.
Short-term capital gains apply to assets held for one year or less and are taxed as ordinary income (up to 37%). Long-term capital gains apply to assets held for more than one year and benefit from preferential rates of 0%, 15%, or 20% depending on your income level.
The IRS treats cryptocurrency as property, not currency. Every crypto transaction is a taxable event, including trading, selling, or using crypto for purchases. Gains and losses are calculated based on the fair market value at the time of the transaction.
It depends on your state. Nine states (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming) have no state income tax. Other states tax capital gains as regular income, with rates varying significantly.
Tax-loss harvesting involves selling investments at a loss to offset capital gains from other investments. This strategy can reduce your overall tax liability. You can deduct up to $3,000 in net capital losses against ordinary income each year.
Maintain detailed records including purchase dates, sale dates, purchase prices, sale prices, and any fees or commissions. For cryptocurrency, track every transaction including the fair market value in USD at the time of each transaction.