Huge Crypto Tax Bill Due But I'm Broke After Market Crash

This is unfortunately a common situation with crypto. The tax system treats each tax year separately, so your 2024 gains are still taxable even if you lost money in 2025. Those 2025 losses will be deductible on your 2025 taxes (though with a $3,000 cap on net capital losses per year against ordinary income). You have several options to consider: 1) File your taxes on time and set up an IRS payment plan. The IRS offers short-term (120 days) and long-term payment plans with reasonable fees. 2) Consider an Offer in Compromise if you truly cannot pay. This allows you to settle your tax debt for less than the full amount. 3) If you haven't filed yet, make sure you've properly calculated your cost basis for all transactions - improper basis calculations are a common error that can inflate your tax bill.

I was in a similar situation last year and found this tool called taxr.ai (https://taxr.ai) that really helped me analyze my crypto transactions and find mistakes in how Coinbase was reporting my cost basis. Their system reviewed all my transactions and found I had been double-counting some fees and had incorrect dates on some purchases which was making my tax liability much higher than it should've been. I ended up saving almost $4k on my tax bill after running everything through their system. They specifically look at crypto tax situations and can help identify if your tax bill is actually correct.

Just wanted to follow up - I was skeptical but decided to try taxr.ai since my situation was similar (lost a bunch in early 2025 after gains in 2024). I uploaded my transaction history and found out that some of my basis calculations were completely wrong! My exchange was treating certain transfers between wallets as taxable events and inflating my gains. After fixing everything, my tax bill went from $9,700 down to $6,200. Still hurts but much more manageable. The system flagged like 37 transactions that had issues.

If you need to actually talk to someone at the IRS about your situation (which might be a good idea), good luck getting through their phone lines. I tried for WEEKS and couldn't reach anyone. Then I found this service called Claimyr (https://claimyr.com) that somehow gets you connected to an actual IRS agent without the endless hold times. They have a video showing how it works: https://youtu.be/_kiP6q8DX5c. I used it to discuss a payment plan for my own crypto tax situation, and they were surprisingly accommodating once I explained everything.

I'm eating my words here. After posting my skeptical comment yesterday, I decided to try Claimyr out of desperation since I'm in a similar situation with crypto taxes from last year. I was literally connected to an IRS agent in 37 minutes. I explained my situation about having a big tax bill from last year's gains but subsequent losses this year, and the agent walked me through the installment agreement options. Got approved for a 72-month payment plan on the spot. I'm still annoyed at the situation but at least now I have a manageable path forward instead of freaking out about the lump sum.

File an extension if you haven't already! This doesn't extend the time to pay, but it gives you more time to figure out your options and make sure your calculations are correct. Also consider liquidating some crypto strategically (even at a loss) to pay the tax bill if you have to. Penalties for non-payment are no joke and can add up quickly.

Have you looked into crypto tax harvesting for 2025? You could sell some of your current holdings at a loss and immediately rebuy them. Unlike stocks, crypto doesn't have wash sale rules (at least not yet), so you can claim the losses while maintaining your positions. This could give you losses to offset your 2025 income, which might help free up some cash to pay your 2024 tax bill.