There is no one clear rule that says how every single one of your cryptocurrency transactions should be taxed. Instead, the IRS periodically releases guidelines to help you understand your obligations.
Our Head of Tax, Nick Waytula, reviewed these guidelines to help produce this comprehensive guide to crypto taxes in the US, alongside our expert writing team.
We’re creating an automated migration that will shift your cost basis from a universal pool into individual wallet or exchange-level pools.
Crypto Tax Calculator will handle this process automatically if you’re currently using a universal cost basis so that you are fully compliant with the IRS’ new rules without lifting a finger.
Once we have migrated your accounting method to comply with the new rules, you will receive a report for each wallet or exchange that shows how your cost basis was assigned.
This ensures you have complete documentation to support your tax filings and demonstrate compliance.
If you don’t yet have an account with Crypto Tax Calculator, you can open one and easily switch to individual wallet/account-based reporting once you’ve imported your transaction history.
Read more about the transition for users here, or sign up now and let us do the hard work for you.
If you had crypto transactions during the year, here’s how to report them on your tax return:
1. Gather your transaction history
2. Calculate capital gains and losses on Form 8949
3. Summarize gains and losses on Schedule D
4. Report crypto income on Schedule 1, Line 8z
5. File your tax return
Need help with the calculations? Simply import your transactions into Crypto Tax Calculator and receive a crypto tax report in just a few clicks, and ditch manual calculations forever.
Our software will fill out and complete IRS forms for you (8949, Schedule D, 1040 etc) which can be exported to TurboTax for easy filing.
In most cases of buying and selling cryptocurrency as a retail investor, you are participating in investing rather than trading. The two are treated differently for tax purposes.
The key difference between investing and trading – along with the different tax treatments, is how losses generated in the crypto-activity can be used.
In their guidance, HMRC have explicitly stated that they would expect it to be exceedingly rare that any crypto-activity constituting buying & selling crypto would be classified as “trading”.
If you are uncertain, speak to a tax advisor as there are always exceptions, including but not limited to, developing tokens and large scale mining.
You can be liable for both capital gains and income tax depending on the type of cryptocurrency transaction, and your individual circumstances. For example, you might need to pay capital gains on profits from buying and selling cryptocurrency, or pay income tax on interest earned when holding crypto.
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Crypto usage in Japan is much higher than the global average, with Chainalysis ranking the country 26th worldwide for crypto adoption. The Japanese National Tax Agency (NTA) has laid out guidelines for the taxation of cryptocurrencies. This guide will distil these guidelines, assisting Japanese taxpayers in staying compliant and filing their crypto taxes correctly with the help of Crypto Tax Calculator.
In short, yes, crypto is taxed in Japan. In Japan, cryptocurrency is viewed as property, and the profits from cryptocurrency are taxed as miscellaneous income (zatsu-shotoku) by the NTA.
The NTA has set out specific guidelines around the taxation of cryptocurrencies, such as Bitcoin. These guidelines can be downloaded in PDF form here.
The crypto transaction examples provided below are likely to constitute a taxable event under miscellaneous income:
To calculate total miscellaneous income attributed to crypto-related activities, the total of all profits from these events during the tax year will need to be calculated using the value in Yen at the time of the transaction. This process can be extremely tedious and time-consuming for crypto investors who have a lot of these transactions. Crypto tax software can help to automate this process.
Japan has a progressive tax rate system for income which includes miscellaneous income. The tax rate varies between 5% to 45% on total income depending on the individual’s income tax bracket. It’s important to note that a mandatory inhabitant tax of 10% is applied to all tax rates. Therefore, the effective tax rate in Japan is between 15% and 55%, and individuals may pay up to a 55% maximum of their income in tax. Additionally, Japan incorporates employment income deductions which can affect the tax an individual will pay.
Tax Rate (%)Taxable Income Bracket (¥)Deduction Amount (¥)50 – 1,950,0000101,950,001 – 3,300,00097,500203,300,001 – 6,950,000427,500236,950,001 – 9,000,000636,000339,000,001 – 18,000,0001,536,0004018,000,001 – 40,000,0002,796,00045>40,000,0014,796,000
For example, based on the above, if an individual earns a total income of 10,000,000 yen, then the total tax payable is 10,000,000*0.33 - 1,536,000 = 1,764,000 yen.
There are some transactions that are not taxable under the NTA’s current tax guidelines for cryptocurrency. These transactions include:
To calculate gains earned on crypto, an individual must first calculate the purchase price for crypto sold or disposed of. There are currently two cost-basis methods recognised by the NTA:
The MAM considers the total cost for all assets of the same type in possession and uses this to find the average cost of each unit. When the average unit cost is established, each disposal's cost basis or acquisition cost can be found directly. This method also referred to as Average Cost (AVCO) is supported by Crypto Tax Calculator under the Setting | Inventory Method.
The TAM is similar to the aforementioned method; however, the primary difference is that this method considers the total acquisition cost of all units of the same type during the entire financial year. To reiterate, the MAM only considers the acquisition cost of the actual holdings at the time of disposal. This method is not currently supported by Crypto Tax Calculator.
It is important to note that all Japanese businesses dealing with cryptocurrency must use the Moving average method for calculating profits and losses.
Unsurprisingly, many find calculating their returns overwhelming, especially if you have a significantly high transaction volume. We recommend turning to crypto tax software, like Crypto Tax Calculator, to not only improve the accuracy of your tax calculations but save hours in time expended.
Capital Losses: A crypto loss cannot be deducted from income or other assets. At this point in time, only losses from real estate, business, asset transfers and forestry income can be deducted from income. Cryptocurrencies do not fit into any of these categories.
The Japanese financial year runs from 1 January to 31 December every year. Individuals can file tax reports between 16 February and 15 March.
Despite popular belief, cryptocurrency is extremely easy to track and is not as anonymous as many believe. Due to much stricter regulation around cryptocurrency exchanges and digital asset investment, almost all exchanges require users to complete a ‘Know-Your-Customer’ (KYC) identification application before the account can be used to purchase crypto. If you have signed up for any exchange which required this check, it is highly likely that the NTA has access to your user record from that exchange. Withdrawals to external wallets can also be tracked, and it is a simple process to follow the money trail from an exchange account to external wallets due to the availability of data on public blockchains.
Japanese cryptocurrency exchanges are required to report any transactions of over 50,000 yen to the Taxation Office. As such, the NTA may contact individuals directly if they suspect any unreported transactions or believe the taxpayer has underpaid their taxes.
When engaging in cryptocurrency transactions in Japan, it is important to know the applicable tax laws and to ensure that all tax obligations are fulfilled within the prescribed deadline.
Individuals can file their taxes online or via paper forms.
For online, follow the instructions below:
For paper forms, use Form A. Please note that you can only use Form A if you have employment income, miscellaneous income, and no estimated tax prepayment.
Manually maintaining records of all of the above doesn’t sound like much fun, does it? Spoiler: it’s not. That’s where we come in! Our crypto tax calculator software can help you aggregate your crypto transaction data to help calculate any gains, losses, income and/or expenses. As an added bonus, we’ve worked with tax professionals from Japan to ensure our platform follows your region’s guidelines.
Once you’ve imported all your data to form a complete overview of your trading history, you’ll be prompted to reconcile any outstanding lines. After those are reconciled, you’ll have the option to download reports showing these values clearly. These reports and the information included will give you the amounts needed to complete your yearly tax return for the NTA.
The information provided on this website is general in nature and is not tax, accounting or legal advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and seek professional advice. Crypto Tax Calculator disclaims all and any guarantees, undertakings and warranties, expressed or implied, and is not liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or Consequential Loss or damage) arising out of, or in connection with, any use or reliance on the information or advice in this website. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied. The information in this website is no substitute for specialist advice.
Holding cryptocurrency in a wallet is not a taxable event by itself.
Taxes on crypto wallets become relevant when you engage in transactions like buying, selling, trading, or earning cryptocurrency. These activities can trigger taxable events that must be reported to the IRS.
Starting in 2025, cryptocurrency exchanges in the US will be required to report your transactions as well as the wallet addresses that you use to send and receive cryptocurrency from the exchange.
You can use crypto tax software like Crypto Tax Calculator to simplify this reporting and make sure you stay on the right side of the law.
Example: If you store Bitcoin in your wallet and it appreciates in value, you don't owe taxes until you sell or trade it. Once you dispose of the Bitcoin, you must calculate any capital gains or losses.
Reporting cryptocurrency on your taxes involves several steps:
Example: If you sold Ethereum for a profit, report the transaction on Form 8949 and carry the totals to Schedule D.
Reporting crypto losses can reduce your overall tax liability:
Example: You have $5,000 in crypto capital gains and $7,000 in losses. You can offset the gains entirely and deduct $2,000 against other income.
Staking rewards are considered taxable income:
Example: You receive staking rewards worth $500. Report this amount as income. If you later sell the rewards for $700, you have a $200 capital gain.
Bitcoin is taxed as property in the USA:
Example: You buy Bitcoin for $10,000 and sell it after two years for $15,000.
Attempting to hide cryptocurrency transactions from the IRS is illegal and strongly discouraged.
The IRS has increased efforts to monitor crypto activities, including partnerships with blockchain analytics firms.
Starting in 2025, cryptocurrency exchanges in the US will be required to report your transactions as well as the wallet addresses that you use to send and receive cryptocurrency from the exchange.
This means any attempt to hide your trading activity or funds using a blockchain will very likely be discovered, as the IRS will know which addresses your identity is linked to.
We strongly recommend you use crypto tax software like Crypto Tax Calculator to thoroughly calculate and report your tax to the IRS.
The consequences for misreporting your crypto taxes include:
While January 1, 2025, remains the effective date for mandatory wallet-by-wallet identification, the IRS has provided temporary relief through December 31, 2025.
Taxpayers may continue using alternative identification methods during this period but must be prepared to adopt wallet-based tracking by January 1, 2026.
Failing to report your crypto taxes can lead to:
- IRS penalties and interest on unpaid tax
- Audits and additional scrutiny of your tax return
- Potential criminal charges for willful tax evasion
The IRS has increased enforcement efforts around crypto, including 1099 reporting requirements. It’s best to file accurately using tools that calculate your crypto gains and income automatically.
Yes. The IRS treats cryptocurrency as property, so most crypto transactions are taxable. This includes:
- Selling crypto for fiat (e.g. USD)
- Swapping one crypto for another
- Spending crypto on goods or services
Even transferring crypto between wallets could trigger a taxable event if it's incorrectly recorded as a sale. Using a tool like Crypto Tax Calculator can help you correctly identify which transactions are taxable and prevent errors.
The 2025 tax season (for the 2024 tax year) introduced a few key updates for crypto investors:
1099-DA regulations delayed: The IRS originally planned to enforce new broker reporting rules (including Form 1099-DA) in 2024. However, final implementation has been delayed until at least the 2025 tax year. That means most crypto platforms are not yet required to issue 1099s for your 2024 transactions.
New question on digital assets (Form 1040): The IRS updated the language on the digital asset question at the top of Form 1040. It now clarifies that you must answer “Yes” if you received, sold, or disposed of crypto—even if you didn't profit.
Greater enforcement focus: The IRS continues to prioritize crypto compliance. This includes more audits, data sharing agreements with exchanges, and penalties for unreported transactions.
For the 2025 tax year (filed in 2026), you can expect new mandatory reporting from exchanges under the 1099-DA framework. Preparing now by accurately tracking your transactions with software like Crypto Tax Calculator can help you stay ahead of these changes.
Nick is a licensed attorney and the Head of Tax at Crypto Tax Calculator, with over 6 years of experience in the crypto tax space. He has previously held key roles at Deloitte and TurboTax, focusing on digital asset taxation and blockchain compliance. At Crypto Tax Calculator, Nick helps drive the development of a leading software that enables taxpayers around the world to accurately and efficiently complete their crypto taxes.
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