In a nutshell: Yes. If you sell crypto for more than you paid, you usually pay tax on the profit (the capital gain), not on the full sale amount, in both the US and Canada. If you sell at a loss, you generally owe nothing on that sale and can use the loss to reduce other gains. Educational only; not financial or tax advice.
Last updated: October 11, 2026.
Most people only think about crypto taxes at the moment they hit “sell.” That is the right instinct: in the US and Canada, simply buying and holding crypto is not taxed, but selling it usually is. What surprises many beginners is what counts as “selling,” how a small or losing sale is treated, and how long you held the coins. This guide answers the selling question step by step for US and Canadian holders, with a simple example and the forms you will actually use. For the bigger picture on gain rates, see our crypto capital gains tax guide.
Table of contents
If I Sell Crypto, Do I Pay Taxes? The Short Answer
Usually yes, but only on the gain. The IRS treats crypto as property, so a sale works like selling a stock: you subtract your cost basis (what you paid, including fees) from the proceeds (what you received, minus fees). The IRS digital assets page confirms that selling a digital asset for cash or exchanging it for another asset is a taxable event. Canada’s CRA takes the same basic view: disposing of crypto usually creates a capital gain or loss, unless your activity amounts to a business.
- Sold for more than you paid: you have a taxable gain.
- Sold for less than you paid: you have a capital loss, which can reduce tax on other gains.
- Sold for exactly what you paid: no gain, no tax, but the sale is still reported.
What Counts as “Selling” Crypto
For tax purposes, “selling” means any disposal, not just cashing out to your bank. Common taxable disposals include:
- Selling crypto for fiat (USD, CAD) on an exchange such as a centralized exchange.
- Crypto-to-crypto trades, such as swapping BTC for ETH, or ETH for a stablecoin. Even with no dollars involved, you are treated as selling the first coin at its market value. Swapping into stablecoins is also a disposal.
- Spending crypto on goods or services.
- Paying fees in crypto can also be a small disposal.
Things that are generally not a sale: buying crypto with cash, holding it, and moving it between wallets you own. Moving coins to your own cold wallet is not taxable, though the network fee can raise questions; we cover that in do you pay taxes when you transfer crypto.
How the Tax Is Calculated: A Simple Example
Say you bought 0.1 BTC for $5,000 plus a $25 fee. Your cost basis is $5,025. Later you sell it for $7,000 and pay a $30 fee, so your proceeds are $6,970.
- Gain = $6,970 − $5,025 = $1,945
- You are taxed on the $1,945, not on the $7,000.
If you bought the same coin in several batches at different prices, the basis you use depends on which units you sold. In the US, you can identify specific units if you keep adequate records; otherwise first-in, first-out (FIFO) is the default. In Canada, you must use the adjusted cost base (ACB), the average cost of all identical coins you hold.
Holding Period: Short-Term vs Long-Term (US)
In the US, how long you held the crypto changes the rate:
- Held one year or less: short-term gain, taxed at your ordinary income tax rate (10% to 37% federally).
- Held more than one year: long-term gain, taxed at 0%, 15% or 20% federally depending on your taxable income. Some higher earners also pay the 3.8% net investment income tax.
The holding period starts the day after you acquired the coin and includes the day you sell. Waiting a few extra days to pass the one-year mark can noticeably lower the tax on a large gain. States may add their own income tax. See the IRS overview in Topic 409, Capital gains and losses.
Canada has no short-term vs long-term distinction for capital gains. A coin held for a week and one held for five years are treated the same way (see the Canada section below).
What If I Sell Crypto at a Loss?
Selling at a loss means no tax on that sale, and the loss can work in your favor:
- US: capital losses first offset capital gains. If losses exceed gains, you can deduct up to $3,000 a year ($1,500 if married filing separately) against ordinary income and carry the rest forward to future years.
- Canada: allowable capital losses offset taxable capital gains. Unused net capital losses can be carried back three years or forward indefinitely, but only against capital gains.
Watch the repurchase rules. Canada has a superficial loss rule: if you (or an affiliated person) buy the same coin back within 30 days before or after the sale and still hold it 30 days later, the loss is denied and added to the new coins’ cost. In the US, the wash-sale rule has historically applied to stocks and securities, not crypto treated as property, but Congress has proposed changing that, so check the current rules before relying on it. Our guide to crypto tax-loss harvesting explains how investors use losses deliberately.
Small Sales and the “Under $600” Myth
There is no minimum amount below which crypto sales become tax-free in the US or Canada. A $40 gain is still a taxable gain and still belongs on your return. The “$600” figure people mention comes from certain information-reporting thresholds for other forms, not from a tax exemption. The IRS also asks every filer the digital asset question near the top of Form 1040: if you sold, exchanged or otherwise disposed of a digital asset during the year, you must answer “Yes.”
Brokers do have optional simplified reporting for small stablecoin and NFT sales on Form 1099-DA, but that only changes what the broker reports. It does not change what you owe.
How to Report a Crypto Sale in the US
- Collect your Form 1099-DA. US brokers report digital asset sales on Form 1099-DA. For 2025 sales, brokers report gross proceeds, and cost basis may be blank. For sales from January 1, 2026, brokers must also report basis for “covered” assets (generally coins bought in that account from 2026 on). Foreign exchanges may not send one at all.
- Fill in your own basis where needed. If Box 1g is blank, use your own records. Whether or not you receive a 1099-DA, you must report every sale.
- List each sale on Form 8949: description, dates acquired and sold, proceeds, basis and gain or loss, split into short-term and long-term.
- Carry the totals to Schedule D (Form 1040), which flows to your main return.
Many people export a CSV from their exchange or use crypto tax software to build Form 8949. Either way, double-check that transfers between your own wallets are not counted as sales.
Selling Crypto in Canada: CRA Rules
The CRA’s crypto-asset guidance says selling crypto for fiat, trading one crypto for another, or using it to buy goods are dispositions. For most individual investors, the result is a capital gain or loss:
- Gain = proceeds − ACB − selling costs.
- 50% inclusion rate: only half of the capital gain is added to your taxable income and taxed at your marginal rate. A $2,000 gain adds $1,000 to taxable income. (The proposed increase to a two-thirds inclusion rate was cancelled in 2025.)
- Report it on Schedule 3 (Capital gains or losses) with your T1 return, using CAD values on the date of each sale.
- Business vs capital: if you trade frequently, for short-term profit, like a business, the CRA may treat 100% of the profit as business income instead. The CRA looks at frequency, holding period and intent.
For more Canadian details, including record-keeping and exchanges that report to the CRA, read our full guide to cryptocurrency tax in Canada.
Quick Checklist Before You Sell
- Know your cost basis (US) or ACB (Canada) for the coins you are selling.
- In the US, check whether you are close to the one-year mark.
- Remember that crypto-to-crypto swaps count as sales.
- Keep exchange statements, wallet addresses and dates; brokers’ forms may be incomplete.
- Set aside money for the tax so you are not forced to sell later at a bad time.
FAQ
If I sell crypto and immediately buy it back, do I pay taxes?
Yes, the sale is still taxable if it was at a gain. If it was at a loss, Canada’s superficial loss rule may deny the loss; in the US, check the current wash-sale rules for digital assets.
Do I pay taxes if I sell crypto but don’t withdraw to my bank?
Yes. The tax is triggered by the sale or trade, not by withdrawing cash. Selling to USD or CAD held on the exchange is still a sale.
Is selling crypto for a stablecoin taxable?
Generally yes. A stablecoin such as USDC is a separate crypto asset, so swapping into it is a disposal in both the US and Canada.
Do I pay taxes on crypto if I never sell?
Holding alone is not taxed. Income such as staking rewards is different; see our guide to crypto staking taxes.
What if I lost money overall this year?
Report the sales anyway. Net losses can reduce your tax now or be carried to future years.
Sources
- IRS: Digital assets
- IRS: Topic 409, Capital gains and losses
- IRS: Understanding your Form 1099-DA
- IRS: About Form 8949
- IRS: About Schedule D (Form 1040)
- CRA: Understanding crypto-assets and your tax obligations
- CRA: Line 12700, Taxable capital gains
Educational content only. This is not financial, legal, tax or investment advice. Tax rules change; talk to a qualified tax professional about your situation.
