Need help with your crypto taxes over the long weekend? Check out The Decrypt 2023 U.S. Tax Guide. It’s free, and there’s a fun quiz at the end so you can receive a free Proof-of-Knowledge certificate in the form of an NFT.

For U.S. citizens, there are really only two ways to not pay crypto taxes on profitable trades: renounce your citizenship or simply not pay them. Simply not paying them is a risky proposition that may lead to the Internal Revenue Service (IRS) coming after you for unpaid taxes, late fees and fines, and in some instances may even lead to prison time. Renouncing your citizenship for tax purposes is fairly uncommon and can also lead to other issues (like the inability to get a visa to regain entry into the USA).

However, there are some ways that you can legally minimize the taxes you have to pay on profitable crypto transactions. The first thing you should do is try to keep excellent records on all of your purchases and sales. Besides being required by the IRS, detailed records will allow you to implement various cost basis methods and accounting options (discussed in detail below).

Crypto Tax Minimization Tip #1: Keep Good Records

A comprehensive transaction record is called a tax lot and should include the following: amount of crypto or digital asset involved in the transaction, value in fiat currency at the time of purchase (and the corresponding date), value in fiat at the time the crypto was traded, sold, or used to purchase a good or service (and the corresponding date).

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Author: Kade Garrett

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