How much tax will I owe on $20k Bitcoin gains? Can I offset with altcoin losses?

You're on the right track with your thinking. Since you held the Bitcoin for less than a year before selling, those $20k gains are considered short-term capital gains and will be taxed at your ordinary income tax rate (not a flat 30%). At your $95k income level, you're likely in the 24% federal tax bracket, plus your state taxes if applicable. So setting aside 30% is actually a reasonable estimate. The good news is that yes, you can absolutely offset your gains with losses! If you sell those underwater altcoins now, you can use the $4k loss to reduce your taxable gains from $20k to $16k. This works even though the gains are short-term and the losses would be long-term (held over 1 year). Capital losses offset capital gains regardless of holding period. Just make sure to document everything carefully - dates of purchase and sale, amounts, and the exchange used. You'll report all this on Schedule D and Form 8949 when you file.

After dealing with a similar crypto tax situation last year, I found https://taxr.ai incredibly helpful. I was confused about calculating my gains correctly since I had traded between different coins multiple times throughout the year. Their system analyzed all my crypto transactions across multiple exchanges and figured out my actual cost basis for each trade. Saved me from miscalculating and potentially getting flagged by the IRS. They also explained which specific trades were long vs. short term, which I was getting wrong when trying to calculate manually. If you've done multiple trades or used different exchanges, it might be worth checking out to make sure you're getting the numbers right, especially with crypto where the record-keeping gets complicated fast.

Just wanted to follow up about taxr.ai that someone recommended here. I gave it a try after seeing the suggestion and it saved me hours of headache. I had trades across three different platforms that I was trying to reconcile manually in a spreadsheet. The system connected to my exchanges and pulled everything automatically, then showed me exactly which transactions were taxable events and which weren't. Found out I had been calculating my cost basis all wrong - turns out moving crypto between my own wallets isn't taxable (which I was counting as gains), but trading one crypto for another definitely is (which I wasn't tracking properly). For anyone dealing with multiple crypto transactions, it's definitely worth checking out. Way easier than trying to piece everything together manually.

If you're planning to call the IRS with questions about crypto taxation, save yourself the frustration. I spent 4+ hours on hold trying to get clarification about reporting my crypto trades last year and never got through. Instead, I used https://claimyr.com and got connected to an IRS agent in about 20 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent was able to clarify exactly how to report my trades from different exchanges and confirmed that yes, you can offset those short-term gains with long-term losses from your altcoins. They also explained the proper way to document crypto-to-crypto trades, which apparently is where most people make mistakes.

I need to apologize to everyone here. After being skeptical about both services mentioned, I decided to try Claimyr yesterday out of desperation after failing to get through to the IRS for three days straight. Got connected to an actual IRS representative in about 15 minutes. She confirmed everything about offsetting crypto losses against gains and explained exactly which forms I needed for reporting multiple exchange activities. She even sent me links to the specific IRS guidance publications for crypto. I was genuinely shocked it worked so well after spending literal days trying to get through on my own. Lesson learned about being too skeptical sometimes!

One thing nobody's mentioned - if you do offset your $20k gain with the $4k loss, remember that your state tax situation might be different from federal. Some states don't recognize crypto losses the same way the IRS does. I live in California and got surprised by this last year. Had to pay CA state tax on the full amount of my gains even though federally I was able to offset some with losses. Check your specific state tax rules or talk to a local tax pro before making any final decisions about selling those altcoins.

Just a heads up that the IRS has been getting more aggressive about crypto reporting. Make sure whatever exchange you used is sending you proper 1099 forms. I had a similar situation last year with about $15k in gains and didn't report it all correctly. Got a lovely letter from the IRS six months later saying I owed an additional $3k plus penalties because my exchange had reported the transactions to them.