Yes, you can deduct cryptocurrency losses on your tax return to offset your capital gains.
If your losses exceed your gains, you can deduct up to $3,000 ($1,500 if married filing separately) in net capital losses against your ordinary income each year. Any remaining losses can be carried forward to future tax years.
To claim the loss, you’ll need to report your crypto transactions on Form 8949 and summarize them on Schedule D. You must provide details including the date acquired, date sold, cost basis, and sale price for each transaction.
Using your losses strategically can reduce your tax liability and help you manage your crypto investment risk. Accurate tracking and categorization of gains and losses are key to maximizing this benefit.