Harvesting Crypto Losses Just Got Easier: TaxBit Releases Updates to Tax Optimizer

TaxBit’s Tax Optimizer has helped tens of thousands of crypto enthusiasts identify tax-optimized trades to lower their tax liability throughout the year—and now, we’re excited to announce an updated version that makes mastering this strategy even easier!

TaxBit’s Tax Optimizer has helped tens of thousands of crypto enthusiasts identify tax-optimized trades to lower their tax liability throughout the year—and now, we’re excited to announce an updated version that makes mastering this strategy even easier!

The Tax Optimizer shows potential capital gains and losses if you were to sell a particular asset, based on real-time market values. Essentially, it allows you to easily identify crypto tax-loss harvesting opportunities, a strategy that savvy investors use to offset capital gains by selling assets at a loss.

What’s changed in the Tax Optimizer?

The Tax Optimizer now allows you to see all of your unrealized gain and loss positions at a glance—across your various assets—instead of only viewing one asset at a time. This real-time snapshot of your capital gains and losses allows you to more quickly identify what assets to harvest losses on.

How to use the updated Tax Optimizer

Step 1: Navigate to the Tax Optimizer page, where you’ll see a snapshot of Total Market Prices, Total Cost Basis, and Unrealized Position (Unrealized Position = Total Market Prices - Total Cost Basis). Here, you’ll also see these values broken down by asset.

Step 2: Next, select the asset you wish to optimize. Please note that an asset will only show if you have a current coin balance for that asset.

Step 3: Once you have selected an asset, you'll have the option to click ‘Optimize Losses.’ From here, you’ll see what trades are required and on what exchange in order to harvest these losses.

Crypto tax-loss harvesting best practices

How can you get the most out of TaxBit’s Tax Optimizer? Keep these tips and tricks in mind:

  1. The wash sale rule does not apply to cryptocurrency. This means that when the market dips, you can sell your assets at a loss to offset your capital gains and then buy them back to reset your cost basis.
  2. You’ll have greater tax savings when you harvest losses year-round. Crypto is highly volatile, meaning that if you wait until the end of year to harvest losses, you’re missing out on the price dips throughout the year.
  3. Consider the assets’ holding period when deciding what losses to harvest. The taxes on cryptocurrency gains vary depending on how long you held the asset before selling. If you have both long- and short-term capital gains of an asset, it’s more beneficial to first harvest the short-term capital losses to offset your short-term gains.
  4. You can deduct any remaining capital losses from your ordinary income. If you’ve already netted your crypto losses against your gains, you can deduct up to $3,000 of any remaining losses from your ordinary income.

View both your short and long-term capital gains

While you’re testing out the updated Tax Optimizer, be sure to check out the ‘My Taxes’ page for another valuable new feature. Here, you can now view a breakdown of both your short-term and long-term capital gains. Check out our blog on the cryptocurrency tax rate for a refresher on the difference in how these are taxed.

With TaxBit, you not only have a trusted source to quickly calculate your taxes, you have a resource throughout the year that empowers you to make tax-optimized trades and ultimately lower your tax liability.

Ready to try out the updates for yourself? Create an account or login to start.

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