Best Crypto Tax Software: Tools, Apps and Rules for 2026

This page is for informational purposes only and does not constitute financial or tax advice. Crypto tax rules are complex and vary by individual circumstance. Consult a qualified tax professional before making filing decisions. We link to official IRS resources throughout so you can verify information directly.

Tax season is here. We’ve gone through our crypto tax guide to verify the current status of the most popular crypto tax platforms for 2026 and any rule changes. Below, you’ll find pricing, integrations, DeFi and NFT support, Trustpilot scores, and country coverage for eight providers — all fact-checked against their official websites and recent reviews.

Here’s what’s new for the 2026 filing season:

• The deadline to file your 2025 tax return is April 15, 2026. You can request an extension to October 15 using Form 4868, but any taxes owed are still due by April 15.
• This is the first year you may receive Form 1099-DA from centralized exchanges like Coinbase and Kraken. For 2025 transactions, brokers report gross proceeds only — cost basis reporting begins for trades starting January 1, 2026.
• Wallet-by-wallet cost basis tracking is now required. As of January 1, 2025, the IRS requires you to track cost basis separately for each wallet and exchange account rather than pooling holdings across platforms. This is the first filing season where those rules apply.

Which crypto tax software should you use?

The best platform depends on your trading style, portfolio complexity, and budget. This table matches common situations to the tools best suited for each.

8 of the best crypto accounting tools for your 2026 taxes

1. Koinly tax software

Koinly is one of the most widely used crypto tax platforms, with more than 800 exchange, wallet, and blockchain integrations. It supports automatic imports from major centralized exchanges via API as well as direct blockchain imports for assets on networks like Ethereum, Solana, and Bitcoin.

The platform generates pre-filled IRS forms including Form 8949 and Schedule D. It also supports localized tax reports for more than 20 countries, making it one of the stronger options for international users. Portfolio tracking is available at every pricing tier, including the free plan, which allows up to 10,000 imported transactions for preview purposes — though downloading actual reports requires a paid subscription.

Koinly supports multiple cost basis methods including FIFO, LIFO, and HIFO, and covers DeFi protocols, NFTs, and margin trading. One limitation noted by users is that its tax-loss harvesting features are less developed compared to some competitors.

Paid plans start at $49 per year for up to 100 reportable transactions, with higher tiers at $99 (1,000 transactions) and $199 (3,000+ transactions). Koinly accepts both credit card and cryptocurrency payments.

2. CoinLedger tax software

CoinLedger, previously known as CryptoTrader.Tax, has positioned itself as one of the most straightforward crypto tax software options for TurboTax users. It is an official TurboTax partner and supports direct imports into TurboTax Online, TurboTax Desktop, TaxAct, TaxSlayer, and H&R Block.

The platform connects to more than 400 exchanges, wallets, and blockchains. It supports per-wallet cost basis tracking, which is now required under IRS rules that took effect January 1, 2025, and allows users to switch to per-wallet tracking within the interface.

CoinLedger includes tax-loss harvesting on all paid plans and provides a data reconciliation workflow to help identify and resolve missing cost basis issues. For users who prefer not to handle their own reporting, CoinLedger offers a “Done For You” professional service at $499, where a CoinLedger tax specialist handles the import, classification, and reconciliation process.

CoinLedger is free to use for importing transaction history, viewing capital gains and losses, and tracking your portfolio. Payment is only required when you want to download or export your full tax report. Paid plans start at $49 per year for up to 100 transactions. The platform reports a user base of more than 700,000 investors.

3. CoinTracker tax app

CoinTracker is a crypto tax and portfolio tracking platform backed by Coinbase Ventures and Kraken Ventures. It serves as Coinbase’s recommended tax software partner and supports more than 10,000 cryptocurrencies across over 500 exchanges, wallets, and DeFi applications.

The platform’s portfolio tracking features are among the most detailed in the category, offering real-time performance dashboards, gain/loss visualization, and tax liability previews. CoinTracker integrates directly with TurboTax and H&R Block for filing, and it generates IRS Form 8949 along with other country-specific tax reports for the US, Canada, UK, and Australia.

CoinTracker’s automated transaction categorization handles DeFi activity, filters out spam tokens, and identifies transactions across more than 50,000 smart contracts. It uses read-only access to wallets and employs end-to-end encryption and two-factor authentication for security.

Pricing starts at $29 per year for up to 100 transactions. Higher-tier plans accommodate larger transaction volumes, with professional-grade options available for high-volume traders.

4. Awaken tax software

Awaken is a crypto tax platform built with DeFi users as its primary audience. It functions as both a DeFi tax calculator and a general-purpose reporting tool — while it handles centralized exchange transactions, its core strength is in accurately processing complex on-chain activity like staking, NFT transactions, lending, and interactions with protocols like Uniswap and OpenSea.

One of Awaken’s key differentiators is its focus on preventing overpayment related to staking activity. Staking transactions can generate thousands of small taxable events, and how they’re categorized can significantly affect the final tax bill. Awaken’s approach prioritizes accurate classification of these events.

The platform offers a genuinely free tier for up to 300 transactions that includes downloadable tax reports — not just a preview. This makes it one of the few platforms where casual users can generate usable reports without paying. Paid plans start at $99 per year, with higher tiers available for active traders. Awaken also offers a pricing match for users who can show a receipt from a competing product.

Awaken generates reports compatible with TurboTax and provides CSV exports for other filing software. It supports capital gains reporting in the US, Australia, Germany, and more than 55 other countries.

5. Summ tax software (formerly Crypto Tax Calculator)

Summ rebranded from Crypto Tax Calculator and is an official tax partner of both Coinbase and MetaMask. With more than 3,500 integrations across exchanges, wallets, and blockchains, it has the largest data source coverage of any provider in this category.

Summ was originally built to handle complex Ethereum transactions, which gives it an edge with on-chain activity. It parses smart contract data directly, which means it can more accurately categorize gas fees, failed transactions, NFT minting events, and cross-chain bridge activity. The platform also offers 1099-DA reconciliation — it can compare the data on your exchange-issued 1099-DA form against its own calculations to catch discrepancies before you file.

The platform includes an accountant collaboration suite that lets users invite their CPA or tax preparer to work within the same interface. It also features an exclusive “Least Tax First Out” algorithm that selects the highest cost basis lots when you dispose of assets, potentially reducing your tax bill.

Summ is free to use for importing, categorizing, and previewing transactions. Paid plans are required for downloading reports, and pricing starts at $49 per year for up to 100 transactions.

6. TokenTax tax software

TokenTax occupies a different position in the market: it’s a hybrid of tax software and a full-service accounting firm. Users can start with automated software to generate their own reports, but they also have the option to upgrade and have a licensed CPA review, prepare, or file their taxes.

This makes TokenTax a strong fit for high-net-worth individuals, active traders dealing with margin or futures, and anyone with multi-entity or cross-border complexity who wants professional oversight. The platform generates Form 8949, Schedule D, TurboTax-compatible files, and FBAR reports for foreign accounts — a feature most competitors don’t offer.

TokenTax connects to more than 120 exchanges and wallets, primarily through API and CSV imports. Its DeFi support is more limited than platforms like Awaken or Summ, and it does not currently cover some major chains like Solana for automated imports.

There is no free plan. Pricing starts at $65 per year for up to 500 transactions on Coinbase only, with broader exchange support available at $199 and above. Full-service CPA plans are available at premium price points.

7. ZenLedger tax software

ZenLedger supports more than 500 exchanges and wallets, over 7,000 token types, and 20+ DeFi protocols. Its particular strength is in handling DeFi activity such as liquidity pools, staking, and lending — transactions that often trip up more general-purpose platforms.

The platform offers integrated e-filing through a partnership with April, allowing users to complete and submit their full tax return (not just crypto) from a single interface. Customer support is available seven days a week, including evenings — more generous than most competitors in the space.

ZenLedger also has enterprise capabilities, including blockchain analytics, forensic accounting, and multi-user permissioning for family offices and institutional clients.

A limited free plan is available. Paid plans start at $49 per year and scale based on transaction volume.

8. DeFiTaxes.us tax software

DeFiTaxes.us is the cheapest crypto tax software on this list — because it’s completely free. It’s an open-source tool designed exclusively for DeFi activity, supporting more than 32 EVM-compatible chains plus Solana, with no transaction limits and no paywalls.

The interface is functional rather than polished. It uses a color-coded system to show the status of each transaction: green means the transaction is ready, while yellow, orange, and red indicate increasing levels of review needed. This approach puts more responsibility on the user to verify and correct data, but it also means there are no paywalls or hidden costs.

The most significant limitation is that DeFiTaxes.us does not support centralized exchange transactions. Users with activity on platforms like Coinbase or Kraken will need to handle that portion of their reporting separately, either manually or with another tool.

The platform generates Form 8949 in a format compatible with TurboTax, as well as CSV exports for use with other filing software.

What is crypto tax software and how does it work?

Crypto tax software is a tool — sometimes called a crypto tax calculator or cryptocurrency tax app — that helps people who invest, trade, or actively use cryptocurrency calculate and report their taxes. The core problem it solves is volume: once you’ve made more than a handful of trades, manually tracking cost basis, calculating gains and losses, and generating IRS-compliant forms becomes impractical. For anyone involved in DeFi, the complexity multiplies further.

The basic workflow is the same across most platforms. You connect your exchange accounts and wallet addresses to the software, which pulls in your transaction data. It then identifies each taxable event, calculates your gains or losses using your chosen cost basis method, and generates the tax forms you need to file — typically Form 8949 and Schedule D. Most crypto tax apps also integrate with TurboTax, H&R Block, and other filing services for direct import.

The IRS classifies cryptocurrency as property, not currency — a designation it first established in Notice 2014-21 and reaffirmed in 2023. That means every sale, trade, or spend of crypto can create a taxable event, much like selling stocks or real estate. Whether you need bitcoin tax software for a few annual trades or a full-featured platform for thousands of DeFi transactions, dedicated software is the most reliable way to stay compliant without spending hours in spreadsheets.

For the IRS’s own guidance on digital assets, see the IRS Digital Assets page.

How to report crypto transactions in 2026

Understanding the reporting mechanics matters when choosing cryptocurrency tax software. This section covers what the IRS requires, what changed in 2025 and 2026, and what it means for how you prepare and file your crypto taxes.

What the IRS expects

Every US taxpayer who files a Form 1040 must answer a question about digital assets: “At any time during 2025, did you receive (as a reward, award, or payment for property or services), or sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”

If the answer is yes, you’re required to report the relevant transactions. This applies even if you lost money. The IRS treats digital assets as property, and the same rules that apply to stocks and real estate apply to crypto: you owe taxes on gains when you dispose of the asset, and you can deduct losses.

Importantly, you must report whether or not you receive any tax forms from an exchange. The responsibility for accurate reporting rests with the taxpayer. For the IRS’s full FAQ, see Frequently Asked Questions on Virtual Currency Transactions. The IRS has also released additional FAQ guidance on broker reporting that addresses how Form 1099-DA works in practice.

What triggers a tax obligation

Not every crypto transaction is taxable. Here’s how the main categories break down.

Capital gains and losses arise when you dispose of a crypto asset — selling for fiat currency, trading one cryptocurrency for another, or spending crypto to buy goods or services. If you held the asset for less than a year before disposing of it, any gain is taxed at your ordinary income rate, which ranges from 10% to 37% depending on your bracket. If you held for more than a year, you qualify for long-term capital gains rates, which range from 0% to 20%. Capital gains and losses are reported on Form 8949 and summarized on Schedule D of your Form 1040.

Ordinary income applies when you earn cryptocurrency rather than dispose of it. Staking rewards are taxable as income at the time you receive them, as are mining rewards, airdrops, crypto received as payment for work, and interest or yield earned through DeFi lending protocols. The value of the crypto at the time you receive it is treated as income, taxed at your ordinary rate, and reported on Schedule 1 or Schedule C.

Not taxable: Simply buying and holding cryptocurrency does not create a taxable event. Transferring crypto between your own wallets is also not taxable, though it now requires careful tracking under the wallet-by-wallet rules described below. Donating crypto to a qualified charity may produce a tax deduction rather than a taxable event.

The 1099-DA form

The most significant regulatory change for this tax year is the introduction of Form 1099-DA, a new IRS form created specifically for digital asset transactions.

Starting with the 2025 tax year, all crypto brokers — including centralized exchanges like Coinbase, Kraken, and Robinhood, as well as payment processors and hosted wallet providers — are required to issue this form to report gross proceeds from digital asset sales and exchanges. Both the taxpayer and the IRS receive a copy, which creates a cross-referencing system similar to what already exists for stock trades via Form 1099-B.

For the 2025 tax year, the 1099-DA reports gross proceeds only. Starting with the 2026 tax year (forms issued in early 2027), brokers will also be required to report cost basis, acquisition dates, and gains or losses.

There are important limitations. The 1099-DA rollout may be uneven in its first year, and some forms may contain incomplete or missing cost basis data — particularly for assets that were transferred between platforms. DeFi platforms that do not custody user assets are not classified as brokers under current rules, following legislation signed on April 10, 2025 that repealed the IRS DeFi broker rule via the Congressional Review Act. This means many on-chain transactions will still not generate a 1099-DA.

Regardless of what forms you receive, you are responsible for reporting all taxable transactions. The IRS has extended transition relief for brokers through 2027 under Notice 2025-33, but this does not reduce the taxpayer’s own reporting obligations. The IRS has increasingly used blockchain analytics tools to match wallets to individuals, and mismatches between your return and the data the IRS receives can trigger enforcement notices.

For more detail, see Coinbase’s guide to the new crypto tax regulations. For a comprehensive breakdown of how the 1099-DA actually works — and why it often contains incomplete data — see Camuso CPA’s definitive 1099-DA guide.

Wallet-by-wallet cost basis tracking

Starting January 1, 2025, the IRS requires taxpayers to track cost basis separately for each wallet and exchange account under Revenue Procedure 2024-28. Previously, investors could use a universal method, pooling all holdings of the same token across every platform into a single cost basis calculation. That option is no longer available.

In practice, this means that if you purchased Bitcoin on Coinbase and also hold Bitcoin on a hardware wallet, the cost basis for each must be calculated independently. When you sell from one account, only the purchase history associated with that specific account is used to determine your gain or loss.

This change significantly increases the complexity of tax reporting for anyone who moves assets between platforms — which is common among DeFi users. Crypto tax software that supports per-wallet tracking is now essential for compliance. For an in-depth analysis of the reporting implications, see The Tax Adviser’s coverage of digital asset broker reporting rules. Several platforms listed above, including CoinLedger and Summ, have built workflows specifically for this requirement.

Cost basis methods

When you sell crypto, you need to determine which specific units you’re selling to calculate your gain or loss. The method you choose can have a substantial impact on your tax bill.

• FIFO (First In, First Out) assumes you sell your oldest holdings first. This is the IRS default if you don’t specify a method.
• LIFO (Last In, First Out) assumes your most recent purchases are sold first.
• HIFO (Highest In, First Out) selects the units you paid the most for, which generally minimizes your taxable gain.
• Specific Identification lets you choose exactly which units to sell, offering the most control but also requiring the most detailed records.

Several online tax platforms allow you to test different methods against your data to see which produces the most favorable outcome before you file. This feature can be worth the subscription cost on its own for active traders.

What Reddit users recommend

Discussion on Reddit consistently points to Koinly and CoinLedger as the two most popular crypto tax apps among individual investors — the Koinly vs. CoinLedger debate is one of the most common threads in crypto tax communities. Both are frequently praised for ease of use and the breadth of their exchange integrations. Summ (formerly Crypto Tax Calculator) has been gaining traction more recently, particularly among users with complex on-chain activity.

For DeFi-specific transactions, Awaken and DeFiTaxes.us are commonly mentioned as better DeFi tax calculators than the more general-purpose alternatives. Users who spend time in DeFi regularly note that all platforms require some manual review and correction, regardless of brand — a reflection of how rapidly the space evolves.

The most common issues users report across all platforms include:

• Forgotten wallets — if you don’t tag all your wallets as belonging to you, transfers between them can be misreported as taxable income.
• Incomplete context — smart contracts can use non-standard methods that automated tools can’t always interpret, leading to miscategorized transactions.
• Protocol differences — two lending protocols may serve the same purpose but operate differently on-chain, requiring different tax treatment that software may not distinguish.

Free crypto tax software options

Most crypto tax software advertises a “free” tier, but in most cases this only allows you to import and preview transactions. Downloading usable tax reports requires upgrading to a paid plan.

The exceptions are worth knowing:

• Awaken — free tier for up to 100 transactions that includes downloadable reports, not just a preview.
• DeFiTaxes.us — completely free with no transaction limits, though it only covers DeFi activity and requires more manual work.
• ZenLedger — offers a limited free plan with basic functionality.
• Bitcoin.tax — allows free report generation for users with fewer than 20 trades.

For users with significant trading or DeFi activity, a paid plan is almost certainly necessary. The cheapest paid tiers from Koinly, CoinLedger, Summ, and ZenLedger all start at $49 per year for up to 100 transactions — making them the most cost-effective options if free plans don’t cover your volume. That said, costs escalate quickly at higher volumes — some platforms charge $300 to $500 or more for 10,000+ transactions, and staking activity alone can generate thousands of micro-transactions that inflate your count.

Considerations before choosing

Before selecting a platform, there are several practical factors worth evaluating.

• 1099-DA reconciliation — as exchanges begin issuing 1099-DA forms, some may contain incomplete or inaccurate cost basis data. Software that can cross-reference these forms against your actual transaction history — as Summ currently offers — can prevent you from overpaying or triggering IRS notices.
• Per-wallet cost basis support — no longer optional. Under the rules that took effect in January 2025, you must track cost basis at the wallet level. Make sure the software you choose supports this.
• Cost basis method testing — can directly affect your tax bill. Platforms that let you compare FIFO, LIFO, and HIFO against your actual data help you make an informed decision before filing.
• Transaction volume costs — can add up fast. If you’re active in DeFi, staking rewards alone can push your transaction count into the thousands. Check how each platform prices higher tiers before committing.
• Manual review is unavoidable — no crypto tax software is perfectly accurate for every transaction type. DeFi protocols evolve constantly, new chains launch regularly, and smart contracts don’t always follow standard patterns. Budget time for reviewing flagged transactions.
• Spam airdrops — can inflate your reported income. Tokens airdropped to your wallet may include both legitimate assets and worthless spam. Not all software distinguishes between them automatically.
• Tax-loss harvesting tools — offered by several platforms and can help you identify unrealized losses in your portfolio that could be strategically realized to offset gains before year-end.

Prediction market tax reporting

For readers active on prediction markets, the tax implications are worth understanding — and they differ from both traditional investing and sports betting.

Tax treatment

The IRS has not issued formal guidance specifically addressing prediction market taxation, a gap covered by CNBC and Accounting Today. In the absence of clear rules, most tax professionals currently recommend reporting net profits as ordinary income. Specifically, this means listing your gains on Schedule 1, Line 8z of Form 1040, typically labeled as something like “prediction market earnings.”

This treatment means prediction market profits are not classified as capital gains. They do not qualify for lower long-term capital gains rates, and they do not receive the 60/40 blended rate available under Section 1256 for certain regulated futures contracts. Some tax professionals have argued that contracts traded on CFTC-regulated exchanges could fall under Section 1256, but this position is debated. CFTC regulation is a necessary condition for §1256 treatment, but it is not sufficient on its own — event-based binary contracts settle on factual outcomes rather than price movements, which creates genuine interpretive tension under the statute. For a detailed analysis of how the different frameworks compare, see Camuso CPA’s breakdown of prediction market tax characterization.

If you earn more than $600 in net profits, you may receive a Form 1099-MISC from the platform. However, even if you do not receive any tax form, you are still legally required to report your earnings.

How losses work

This is the most consequential distinction for active traders. Under the current ordinary income treatment, prediction market losses can offset gains dollar-for-dollar. If you made $5,000 on one set of contracts and lost $3,000 on another, you report $2,000 in net income.

This is materially different from sports betting. Gambling winnings are reported as income, but gambling losses can only offset gambling winnings — and only if you itemize your deductions, which most taxpayers do not. Under the One Big Beautiful Bill Act passed in 2025, gambling loss deductions were further tightened to 90% of gambling winnings — meaning it is now possible to break even gambling and still owe taxes. Under the ordinary income classification, prediction market traders do not face these restrictions.

It’s worth noting that this favorable treatment is not guaranteed to last. The classification is being actively contested in state-level legal proceedings where regulators have argued that event contracts — particularly sports-related ones — constitute gambling and should be taxed accordingly. If the classification changes, the loss deduction rules would change with it.

Software support

Most crypto tax software does not currently support prediction market transaction imports natively. If you trade on a platform that settles in USD, you will likely need to manually track your trades, deposits, and withdrawals and enter them directly into your tax return or provide the data to your accountant.

For crypto-settled prediction market activity, there is an additional layer of complexity. Depositing or withdrawing USDC or other tokens may itself create taxable events at the crypto layer that need to be tracked separately from the prediction market gains and losses.

Specialized tax services that focus on prediction market reporting exist for complex situations. Regardless of which approach you take, the most important step is keeping detailed records of every trade — including the contract, your cost, the settlement outcome, and the date.

FAQ

What is the best crypto tax software?

The best crypto tax software depends on how you trade and file. For most US filers, CoinLedger and Koinly offer the strongest combination of ease of use, exchange coverage, and TurboTax integration. CoinTracker is a strong choice for Coinbase users and portfolio tracking. For DeFi-heavy portfolios, Awaken and Summ provide the most accurate on-chain transaction classification. TokenTax is the best option if you want a CPA to handle filing on your behalf. DeFiTaxes.us is the best free option for DeFi-only users willing to do some manual review. See the comparison table at the top of this page to match your situation to the right tool.

When do I need to file my 2025 taxes?

The IRS opened the 2026 filing season on January 26, 2026, and began accepting 2025 tax returns. The filing deadline is April 15, 2026. This is the last day to file your return or request a six-month extension using Form 4868. Even if you file an extension, any taxes owed are still due by April 15. If you request an extension, the extended deadline to file is October 15, 2026. For estimated tax payments on 2026 income, quarterly due dates are April 15, June 15, and September 15, 2026, with the fourth quarter payment due January 15, 2027.

How does crypto tax software work?

You connect your exchange accounts and wallet addresses to the platform. The software imports your transaction history, calculates gains and losses based on your chosen cost basis method, and generates the IRS forms you need to file — typically Form 8949 and Schedule D. You then use those forms to complete your tax return, either manually or by importing them into filing software like TurboTax.

Is crypto tax software safe?

In terms of fund security, yes — the software cannot access or move your crypto. In terms of accuracy, no platform is perfect. All crypto tax software requires user verification, particularly for DeFi transactions, transfers between wallets, and edge cases that automated tools may misinterpret. You are ultimately responsible for the accuracy of your tax return.

Does the software report to the IRS?

No. The purpose of the software is too generate reports for you to use when filing. It does not send any information to the IRS or any tax authority on your behalf. Some platforms integrate with filing services like TurboTax that handle the actual submission, but the software itself is a calculation and reporting tool.

How much does the software cost to use?

Most platforms start around $49 per year for up to 100 transactions — Koinly, CoinLedger, Summ, and ZenLedger are the cheapest paid options at that tier. CoinLedger is free to import and track your portfolio, with payment required only to download tax reports. Pricing increases with transaction volume, typically reaching $199 to $299 for 1,000 to 3,000 transactions, and $400 to $600 or more for 10,000+ transactions. DeFiTaxes.us is completely free for DeFi-only activity. Awaken offers free reports for up to 300 transactions.

Do I have to report crypto if I didn’t sell?

Buying and holding crypto is not a taxable event. However, if you earned crypto through staking, mining, airdrops, or as payment for work, that is considered income and must be reported in the year you received it, regardless of whether you later sold it. The IRS requires you to answer the digital asset question on Form 1040 even if your only activity was receiving, not selling.

What is Form 1099-DA?

Form 1099-DA is a new IRS form specifically for digital asset transactions, first issued for the 2025 tax year (you’ll receive it in early 2026). Crypto brokers use it to report your gross proceeds from sales and exchanges. Starting with the 2026 tax year, it will also include cost basis, acquisition dates, and gain/loss calculations. Both you and the IRS receive a copy. For details on how the form works and what brokers must report, see the IRS instructions for Form 1099-DA.

What is wallet-by-wallet cost basis tracking?

Starting January 1, 2025, the IRS requires you to track cost basis separately for each wallet and exchange account under Rev. Proc. 2024-28. If you hold the same cryptocurrency across multiple platforms, each account’s holdings must be tracked independently when calculating gains or losses. This replaces the previous approach where investors could aggregate holdings across platforms.

Are prediction market winnings taxable?

Yes. Profits from prediction markets are considered taxable income by the IRS. Most tax professionals currently advise reporting them as “Other Income” on Schedule 1 of Form 1040, as reported by CNBC. The IRS has not issued formal guidance on the specific classification of prediction market income. Consult a qualified tax professional for advice on your specific situation.

Can I deduct prediction market losses?

Under the current treatment as ordinary income, prediction market losses can offset gains. This is distinct from sports betting, where losses can only offset winnings and only if you itemize deductions — a limitation further tightened under the One Big Beautiful Bill Act. However, this classification is unsettled and could change if the IRS issues formal guidance or if ongoing legal challenges reclassify event contracts.

Can I deduct crypto losses?

Yes. Capital losses from crypto can offset capital gains dollar-for-dollar. If your total losses exceed your total gains, up to $3,000 of net losses per year ($1,500 if married filing separately) can offset ordinary income. Any remaining unused losses carry forward to future tax years.

Does crypto tax software handle DeFi transactions?

Most major platforms support DeFi to varying degrees, but none handle every protocol perfectly. DeFi transactions are complex by nature — different protocols use different smart contract architectures, and automated tools cannot always interpret every interaction correctly. Awaken, Summ, and DeFiTaxes.us are designed with DeFi as a primary focus and tend to perform better with on-chain activity than general-purpose alternatives. Regardless of which platform you use, plan to spend time reviewing and manually correcting some transactions.

The information on this page is for general informational purposes only and should not be taken as financial, tax, or legal advice. DeFi Rate is not a tax advisor. Tax rules are complex and subject to change. Consult a qualified tax professional for advice specific to your situation. Links to IRS and other government resources are provided for your own research.

About The Author

Alex Miguel

Alex is a writer and DeFi enthusiast who has been in the space since 2016. He has written whitepapers, press releases, and social media content for several projects in the space.

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