The United States distinguishes between long-term and short-term capital gains. If you hold a particular cryptocurrency for one year or less then they are considered short-term capital gains. Short-term capital gains are added to your income and taxed at your ordinary income tax rate.

If you held a particular cryptocurrency for more than one year then you are eligible for tax preferred long-term capital gains. In 2018 the capital gains tax rates are either 0%, 15% or 20% for assets held for more than a year. Capital gains tax rates on assets held for less than a year correspond to ordinary income tax brackets (10%, 12%, 22%, 24%, 32%, 35% or 37%).

For single filers you will pay 0% in long-term capital gains if your income is $0-$38,600, 15% if your income is $38,601-$425,800, and 20% if your income is $425,801 or more. For married filers filing jointly you will pay 0% if your income $0-$77,200, 15% if your income is $77,201-$479,000, and 20% if your income is $479,001 or more.

The difference between your capital gains and losses is called your “net capital gain.” if your losses exceed your gains, you can deduct the difference on your tax return, up to $3,000 per year ($1,500 if single). If you have net capital losses for the year that exceed the deductible  amount then the IRS allows you to carry the excess into the next year, allowing you to deduct it on that year’s return.

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