Calculate tax-efficient withdrawal strategies for crypto portfolios using FIFO, LIFO, and HIFO accounting methods. Minimize capital gains tax liability and maximize your after-tax returns.
Select the date you purchased this lot
How much you want to withdraw/sell
Current market price per unit
Tax rate for assets held ≤365 days
Tax rate for assets held >365 days
Sells your earliest purchases first. The default method for most exchanges and the most common approach.
Best when:
Sells your most recent purchases first. Less common but can be advantageous in specific situations.
Best when:
Sells lots with the highest purchase price first, minimizing capital gains. Often the most tax-efficient method.
Best when:
The IRS allows you to specifically identify which lots to sell on a transaction-by-transaction basis.
Requirements:
The IRS requires you to use the same accounting method consistently for each specific cryptocurrency. You can use FIFO for Bitcoin, LIFO for Ethereum, and HIFO for another coin, but once chosen, you must continue using that method for that specific asset unless you get IRS approval to change. Many investors use specific identification to optimize each transaction individually.
For each lot, enter three required fields:
Click "Add Another Lot" to add more lots. You can add unlimited lots to represent your portfolio.
Enter two key values:
Make sure your withdrawal amount doesn't exceed your total holdings across all lots.
Enter your tax rates:
Check your tax bracket or consult a tax professional for accurate rates.
Click "Calculate Optimal Tax Strategy" to see:
Scenario: You bought: 1 BTC at $30,000 (2 years ago), 1 BTC at $50,000 (6 months ago), 1 BTC at $40,000 (3 months ago).
Withdrawal: Current price: $60,000. You want to sell 1.5 BTC. Tax rates: 24% short-term, 15% long-term.
Age (days) = Current Date - Purchase Date
Determines if lot qualifies for long-term treatment (>365 days)
Cost Basis = Quantity × Purchase Price
Your original investment in this specific lot
Current Value = Quantity × Current Price
What this lot is worth at today's market price
Capital Gain = Current Value - Cost Basis
Your profit (or loss if negative) on this lot
Rate = Age > 365 ? Long-Term : Short-Term
Long-term rate if held >365 days, otherwise short-term
Tax = Capital Gain × (Tax Rate / 100)
Your tax owed on the gain from this lot
The calculator sums the tax liability across all selected lots for each method, then identifies which method produces the lowest total tax. The difference between the best and worst method is your potential tax savings.
Strategically realize losses by selling lots that have declined in value. These losses offset gains from profitable sales, reducing overall tax liability. You can harvest losses while immediately repurchasing (no wash-sale rule for crypto currently).
If a lot is close to the 365-day threshold, consider waiting to sell until it qualifies for long-term capital gains. The rate difference (often 9-13%) can be substantial, especially on large gains.
Gift lots with very low cost basis to family members in lower tax brackets. They inherit your cost basis but may pay lower capital gains rates when they sell. Annual gift tax exclusion applies.
If selling a large position, consider splitting the sale across two tax years. This prevents pushing you into a higher tax bracket in a single year and may allow you to use lower long-term capital gains rates.
Donate lots with large unrealized gains to charity. You avoid capital gains tax entirely and can deduct the full fair market value. Much more tax-efficient than selling and donating cash.
Maintain detailed records of every purchase: date, quantity, price, exchange, transaction ID. Use crypto tax software (CoinTracker, Koinly, TokenTax) to automatically track and optimize across hundreds or thousands of transactions.
Scenario: You hold 10 BTC across 20 lots purchased at prices ranging from $15,000 to $65,000. Current price: $60,000. You need $300,000 (5 BTC) for a down payment.
Naive approach (FIFO): Sells oldest lots bought at $15k-$25k. All long-term, but massive gains. Tax: ~$50,000 at 15% long-term rate.
Optimized approach (HIFO + loss harvesting): Sells the 5 BTC purchased closest to $60,000 (highest basis), minimizing gains to near-zero. Separately harvests $50,000 in losses from altcoins to offset remaining gains. Tax: $0-5,000. Tax savings: $45,000+!
All cryptocurrency sales must be reported on Form 8949 and Schedule D. The IRS receives reports from exchanges via Form 1099-K. Failure to report crypto gains is tax evasion and subject to penalties, interest, and potential criminal prosecution.
Once you choose an accounting method (FIFO, LIFO, HIFO) for a specific cryptocurrency, you must use it consistently for that asset in all future years unless you receive IRS approval to change. Inconsistent methods trigger audits.
Most states tax capital gains as ordinary income, adding 3-13% to your federal tax bill. A few states (TX, FL, WY, NV, WA, TN, SD, AK, NH) have no income tax. Consider this when calculating true tax liability.
Trading one crypto for another (BTC → ETH) is a taxable event, not just selling for USD. You must calculate and report the gain/loss on every single trade, even if you never cashed out to fiat.
Staking rewards, mining income, and airdrops are taxed as ordinary income at fair market value when received. Later selling those assets creates a second taxable event (capital gains/losses). You're taxed twice on the same asset.
If you can't prove your purchase price (old exchange shut down, lost records), the IRS can assume your cost basis is $0, making your entire sale taxable as gain. Keep meticulous records and export data before exchanges close.
Every DeFi swap, liquidity pool deposit/withdrawal, yield farm claim, and wrapped token conversion is a taxable event. DeFi users can easily have 1,000+ taxable events per year. Use specialized crypto tax software.
The IRS is actively auditing crypto holders. They've subpoenaed exchange records, purchased blockchain analysis tools, and hired specialized crypto agents. Accurate reporting and professional help are essential for high-net-worth positions.
This calculator is for educational purposes only and does not constitute tax advice. Cryptocurrency taxation is extremely complex and evolving. The IRS regularly issues new guidance that can significantly impact your tax treatment. Every person's tax situation is unique based on income, state, deductions, and specific transactions. Always consult with a licensed CPA or tax attorney who specializes in cryptocurrency before making any tax-related decisions. The cost of professional advice ($500-$2,000 typically) is far less than potential penalties, interest, and back taxes from mistakes.
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