How much taxes do I owe for my crypto transactions? First-timer questions

Thanks for explaining! If I use something like Coinbase, do they provide the info on what I paid vs what I sold it for? Or do I need to track all that myself?

Wait I'm confused... if I bought $500 of Bitcoin and it went down to $400 when I sold, I would have a loss right? Do I still have to report that or only when I make money?

Most major exchanges like Coinbase will provide you with transaction history, but the quality of their tax reporting varies. They'll generally show purchase and sale prices, but you should still keep your own records to verify everything is correct. Don't rely solely on the exchange's reporting. Yes, if you bought at $500 and sold at $400, that's a $100 capital loss. You should still report it because losses can offset other capital gains and potentially reduce your taxable income (up to $3,000 per year). Reporting losses is actually beneficial for most taxpayers.

Does it work with all exchanges? I use some pretty obscure ones and getting my transaction history organized has been a nightmare.

I've tried other crypto tax tools that were total garbage. They mixed up my cost basis and couldn't handle transfers between wallets. How does taxr handle those situations?

It works with over 500+ exchanges from the major ones to smaller platforms. I was using Binance, Coinbase and a smaller exchange and it handled all of them perfectly. You can check their site for the full list. Completely agree about the wallet transfer issues! That was exactly my problem with other tools. Taxr.ai correctly identifies transfers between your own wallets so they're not mistakenly counted as sales. It traces the entire chain of custody for your crypto assets, which prevents the classic "phantom gain" problem where other tools think you sold when you just moved crypto to a different wallet.

Wait, how is this even possible? The IRS never calls anyone back. Is this legit or some kind of scam?

How much does this service cost? The IRS call center is literally the worst but paying just to talk to them seems ridiculous.

It's definitely legit. It's not the IRS calling you back directly - the service holds your place in the IRS phone queue and then calls you when your turn comes up. Basically saves you from being on hold for hours. I was skeptical too, but it worked exactly as advertised. I don't remember the exact cost as it was a few months ago, but it was reasonable considering it saved me hours of being on hold. The peace of mind from talking directly to an IRS agent about my crypto situation was totally worth it - they explained exactly which forms I needed and how to report everything properly.

I'm in California. Do they have special rules I need to know about for crypto? Their tax system already confuses me enough!

California essentially follows the federal treatment of cryptocurrency as property, so the same capital gains rules apply. However, California taxes all income (including capital gains) at your marginal income tax rate - there's no special lower rate for long-term capital gains like there is federally. California's state income tax rates are pretty high compared to many other states, ranging from 1% to 13.3% depending on your income level. So if you have significant crypto gains, you'll want to set aside extra to cover the state portion of your tax bill.

Mining is actually taxed completely differently! When you mine cryptocurrency, the IRS considers the fair market value of the coins you receive as ordinary income on the day you receive them. You have to pay taxes on that value immediately, even if you don't sell the crypto. Then, if you later sell those mined coins, you'll also have a capital gain/loss based on the difference between the value when you mined them (already taxed as income) and what you sold them for. So mining essentially creates a two-step tax situation: income tax when mined + capital gains tax when sold. This is why many miners set aside around 30-40% for taxes.

Yes! Using a crypto debit card is considered selling your crypto and then using the proceeds to buy something. Each purchase creates a taxable event. The IRS sees it as if you sold your crypto for USD first, then made the purchase.