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Tax Write-Offs for Cryptocurrency Losses

Save Thousands on Your Taxes

For those who have invested in cryptocurrency, there is a little-known tax break that can save you thousands of dollars on your taxes. This tax break is called a capital loss deduction, and it allows you to deduct up to $3,000 in losses from the sale of cryptocurrency from your income.

Qualifying for a Capital Loss Deduction

In order to qualify for a capital loss deduction, you must have sold your cryptocurrency at a loss. You cannot deduct losses from cryptocurrency that you still own.

The amount of your capital loss deduction is equal to the difference between the amount you paid for the cryptocurrency and the amount you sold it for.

Using a Capital Loss Deduction

You can use a capital loss deduction to reduce your taxable income. This can result in a significant savings on your taxes.

For example, if you sold $10,000 worth of cryptocurrency at a loss of $3,000, you could deduct this loss from your income. This would reduce your taxable income by $3,000, which could result in a tax savings of up to $1,000.

Conclusion

If you have sold cryptocurrency at a loss, you may be eligible for a capital loss deduction. This tax break can save you thousands of dollars on your taxes. If you are unsure if you qualify for this deduction, you should consult with a tax preparer.