The critical 1-year rule
Hold crypto for more than 1 year before selling: long-term capital gains rates (0%, 15%, or 20% depending on income).
Sell within 1 year: short-term capital gains = ordinary income rates (10–37%).
For a married couple filing jointly at $200k income (2024):
- Short-term crypto gain: 24% federal rate
- Long-term crypto gain: 15% federal rate
The 1-year threshold matters enormously.
Crypto vs stocks: wash sale difference
Stocks have wash sale rules: you can't sell at a loss and buy back the same stock within 30 days. Crypto (as of 2024) is NOT subject to wash sale rules. This means you can sell BTC at a loss to harvest the tax loss, then buy back immediately. This is a strategy not available in equity markets. (Legislation to extend wash sales to crypto has been proposed but not enacted as of 2024.)
Form 8949 reporting
Every crypto sale goes on Form 8949 (same as stock sales). Export transaction history from your exchange, import into tax software (TurboTax, H&R Block, Koinly), which auto-generates Form 8949.