What is tax loss harvesting?
Tax-loss harvesting allows investors to reduce their tax liabilities by offsetting gains with losses. It's effective for both traditional securities and cryptocurrency investments. It can lower tax bills or serve as a hedge against market downturns, but it requires careful planning and know-how.
Example: If you bought ETH at $3,000 and it’s now $2,200, selling could realize an $800 loss. That loss can offset gains from other crypto — or even stock trades.
Offset gains with losses
Selling crypto at a loss can reduce your taxable capital gains.
Works across asset types
TLH applies to stocks, crypto, and other investments.
Timing matters
Identifying opportunities in real time is crucial to maximizing savings.
How CoinTracker helps you maximize tax loss harvesting
Tax-loss harvesting is one of the most powerful (yet underused) tools to reduce your crypto tax bill.
With CoinTracker, you don’t need spreadsheets or guesswork—we surface your loss harvesting opportunities in real time, helping you take strategic action before year-end.
Here’s how CoinTracker makes it easy:
- Identify loss opportunities instantly across your wallets & exchanges
- Offset capital gains and reduce your taxable income
- Generate tax reports that reflect harvested losses (Form 8949 included)
- Avoid accidental repurchases, with clear visibility into your transaction history
- Export CPA-ready reports to support your broader tax planning
How to start tax loss harvesting with CoinTracker
1. Connect your wallets & exchanges
Sync all your wallets, exchanges, and DeFi activity to CoinTracker. This gives you a complete view of your crypto portfolio and tax position.
2. Review your unrealized losses
Go to the Performance or Tax Loss Harvesting section. CoinTracker shows which assets are currently underwater—and how much you could save if you sell.
3. Harvest losses strategically
Sell assets at a loss to offset gains (or up to $3,000 in ordinary income). CoinTracker helps you avoid repurchasing too soon, so you stay in the clear.
4. Let CoinTracker handle the tax forms
After you harvest losses, CoinTracker automatically updates:
- Your capital gains summary
- Form 8949
- Your adjusted cost basis
Export tax reports directly or send them to your accountant with a few clicks.
Frequently Asked Questions
No, if you only buy and hold crypto, you don't need to report it. However, if you earn crypto (from staking, mining, airdrops, or payments), it's considered taxable income and must be reported, even if you don't sell. Explore more details in our crypto tax guide.
