Every investor should be aware of these key crypto tax rules as Bitcoin has increased by more than 50% this year.

• As the price of bitcoin hovers around $70,000, experts offer tax advice for both new and seasoned crypto investors.
• Investors must comprehend certain fundamental principles, although the future of crypto policy and regulation remains uncertain.
• Experts advise investors to determine the original purchase prices for each crypto wallet before 2025.

Tax advice is available for both new and seasoned crypto investors as the price hovers around $70,000.

According to Coin Metrics, the price of bitcoin fluctuated on Monday, rising to $69,982.00 before falling below $67,000.

Despite a decline from a record high of $73,000 in March, bitcoin's price has increased by more than 50% year-to-date, as investors consider the impact of former President Donald Trump's comments and the Federal Reserve's recent meetings.

In early July, the price of bitcoin reached a two-month low due to the Fed's June minutes suggesting that they were not yet prepared to reduce interest rates.

Trump stated on Saturday at the Bitcoin Conference in Nashville that our government has disregarded the fundamental rule that every bitcoiner remembers: "Never sell your bitcoin."

Trump stated that if he is elected, his administration's policy will be to keep all bitcoin currently held or acquired by the U.S. government in the future.

1 million people owe more than $200,000 in federal student loans. Home insurance premiums increased by 21% last year, partly due to climate change. A Harris presidency could shape a key middle-class tax credit.

Investors are keeping a close eye on Vice President Kamala Harris's potential shift in crypto policy, as she has yet to outline any specific plans but some hope she will move away from the scrutiny led by Gary Gensler and Elizabeth Warren.

Experts advise that while the future of crypto policy and regulation remains uncertain, there are certain tax implications to be aware of.

How to calculate crypto taxes

If you exchange or sell a coin for a profit, it may be subject to capital gains or regular income taxes, depending on the length of time you held the asset.

Qualifying for long-term capital gains tax exemptions of 0%, 15%, or 20% after holding crypto for more than one year, and higher earners may also be subject to an additional 3.8% levy, known as net investment income tax.

Capital gains or income taxes apply to assets held for less than a year.

The gain or loss on the sale of an asset is calculated by subtracting the original purchase price, or "basis," from its value at the time of sale or exchange. If a basis is not established, the IRS assumes it to be zero, as explained by Adam Markowitz, an enrolled agent at Luminary Tax Advisors in Windermere, Florida.

Without any foundation, you might mistakenly declare higher capital gains to the IRS.

It can be difficult for investors with numerous exchanges and numerous transactions to determine what constitutes a sale, as the responsibility for proving what they paid lies with the taxpayer.

New crypto reporting rules

In June, the U.S. Department of the Treasury and IRS issued final instructions for digital asset brokers, requiring annual reporting.

Starting in 2026, digital currency brokers will be required to report gross proceeds from sales in 2025 via Form 1099-DA. In 2027, brokers will need to include cost basis for certain digital asset sales made in 2026.

According to an IRS revenue procedure released in June, crypto investors can still establish a "reasonable allocation" before Jan. 1, 2025, despite limited past reporting.

It may be beneficial to consult with a tax professional in 2024, even during the current year, when selling tokens, to specifically identify or allocate cost basis to those sales, according to Andrew Gordon, tax attorney, certified public accountant, and president of Gordon Law Group.