Everyone knows about loss harvesting. But there are dozens of other deductions you might be leaving on the table. Here's the complete list.
The Big One: Loss Harvesting
Sell losing positions to offset gains. You can deduct up to $3,000 per yearin net losses against ordinary income.
Losses carry forward indefinitely — you can use them in future years.
1. Transaction Fees
Gas fees, network fees, and exchange fees can often be added to your cost basis:
- Trading fees — Exchange fees on buys/sells
- Gas fees — Ethereum, Solana, and other network fees
- Withdrawal fees — When moving off exchanges
Tip: These increase your cost basis, reducing gains or increasing losses.
2. Software & Subscription Costs
If you pay for crypto tax software, tracking tools, or portfolio managers:
- Tax software — Like Arthur Labs!
- Portfolio trackers — CoinGecko Pro, Delta, etc.
- Hardware wallets — Can be depreciated over time
3. Professional Services
CPAs and tax attorneys specializing in crypto:
- CPA fees — For crypto-specific tax work
- Tax attorney fees — For audit defense
- Bookkeeping — For transaction recording
4. Home Office (If You Trade Full-Time)
If crypto trading is your business (not just investing), you may deduct:
- Home office deduction — Percentage of rent/mortgage
- Equipment — Computers, monitors, internet
- Software — Trading platforms, analysis tools
⚠️ Important: Trader Tax Status
To deduct home office and equipment as a trader, you must qualify as a "trader in securities" under IRC Section 475. This requires:
- Trading is your primary livelihood
- You trade substantially and continuously
- You have a business motive
5. Education & Research
- Courses — Crypto trading courses, blockchain certifications
- Subscriptions — Research services, market data
- Conferences — Industry events (if business purpose)
- Books & publications — Technical and market analysis
6. Safe Deposit Box & Storage
- Safe deposit boxes — For hardware wallet storage
- Cloud storage — For transaction records (debated)
- Cold storage equipment — Hardware wallets, backup devices
7. Crypto Lost or Stolen
If your crypto is stolen or lost, you may be able to claim it as a loss:
- Theft losses — Can be deducted (but only to the extent not reimbursed)
- Lost private keys — More complicated, requires documentation
- Bridge exploits — Generally treated as losses
- Exchange bankruptcies — Mt. Gox, etc.
8. Charitable Contributions
Donating crypto to charity can be extremely valuable:
- Donate appreciated crypto — No capital gains tax
- Deduct fair market value — Even if you bought it cheap
- Qualified charities — Must be 501(c)(3) organizations
Example: Donate $50,000 BTC you bought for $5,000. You get a $50,000 deduction AND pay zero capital gains. That's huge.
9. Business Expenses (For Crypto Businesses)
- Mining operations — Equipment, electricity, space
- Staking operations — Infrastructure costs
- DeFi protocol costs — Node operation, etc.
- Employee costs — If you have a team
Deductions vs. Credits
📉 Deductions
Reduce your taxable income. A $1,000 deduction saves you ~$240 (at 24% bracket).
💰 Credits
Reduce your tax dollar-for-dollar. A $1,000 credit saves you $1,000.
Record Keeping
To claim deductions, you need documentation:
- Receipts — For all expenses
- Bank statements — Showing payments
- Invoices — From service providers
- Mileage logs — If applicable
Don't Leave Money on the Table
Arthur Labs identifies all deductible transactions and generates proper documentation.
Scan Your Wallet →Disclaimer: This article is for educational purposes only. Tax deductions vary by situation — consult a qualified tax professional.