Huge Crypto Tax Bill? Try a Free Tax Loss Harvesting Tool
Facing a huge crypto tax bill in 2024? Try a free tax loss harvesting tool to help you identify and harvest your losses to reduce your taxable gains.
Whether you’ve got losses piling up or a looming capital gains tax bill - a free tax loss harvesting tool can help you optimize your tax position. Tax loss harvesting is a strategy used by those in the know to reduce their taxable gains by deliberately selling off crypto at a loss, but what about those new to the crypto market or who don’t have an accountant to do the calculations for them?
That’s where a free crypto tax loss harvesting tool comes in! A good crypto tax loss harvesting tool should be able to:
Let you preview a free tax summary for the financial year
Identify your unrealized gains and losses
Break down gains and losses into short vs. long-term
Simulate sales to help you preview how it would impact your tax bill
While there’s only a small handful of crypto tax loss harvesting tools out there, they’re powerful tools when used right - so let’s compare to figure out which is the best of the best.
Want to learn more about crypto tax loss harvesting before you dive in? Check out our crypto tax loss harvesting guide.
What’s the best crypto tax loss harvesting tool?
| Platform | Free crypto tax loss harvesting tool? | Preview unrealized gains and losses? | Free tax preview? | Breaks down short vs. long-term gains/losses? | Simulates sales? |
|---|---|---|---|---|---|
| Koinly | ✔ (excluding Canadian users) | ✔ | ✔ (excluding Canadian users) | ✔ | ✔ |
| CoinLedger | ✘ only with paid plan | ✔ (in BETA) | ✘ only with paid plan | ✘ | ✘ |
| ZenLedger | ✘ only with paid plan | ✔ | ✔ up to 25 transactions, or paid plan | ✘ | ✘ |
| CoinTracking | ✔ | ✔ | ✔ up to 200 transactions, or paid plan | ✘ | ✘ |
| Blockpit | ✘ only with paid plan | ✔ | ✘ only with paid plan | ✔ | ✘ |
| CoinTracker | ✘ only with paid plan | ✔ | ✘ only with paid plan | ✘ | ✘ |
| CryptoTaxCalculator | ✘ only with paid plan | ✔ | ✘ only with paid plan | ✘ | ✘ |
| Coinpanda | ✔ | ✔ | ✔ up to 25 transactions only, or paid plan | ✘ | ✘ |
| TokenTax | ✘ only with paid plan | ✘ only with paid plan | ✘ only with paid plan | ✔ | ✘ |
As you can see, there’s only one tool that includes all the features you need, free of charge, to effectively optimize your tax bill without a low transaction limit - and that’s Koinly. In particular, Koinly is the only tool that also lets you simulate sales within our app, so you can easily see how it would impact your gains/losses for the year without getting the calculator out. As well as this, many of the other tools don’t factor in how long you’ve held your crypto, and this matters because the majority of tax offices dictate that you must offset your losses in a particular order against gains.
Koinly’s tax optimization dashboard was launched in 2024, so it’s up to date with the most recent IRS crypto tax rules to help you stay compliant. Let’s take a look at how Koinly’s free crypto tax loss harvesting tool works.
How does a free crypto tax loss harvesting tool work?
Koinly is a portfolio tracker - so it needs read-only access to the wallets, exchanges and blockchains you use in order to calculate your tax liability, and identify your unrealized gains and losses. You can find a wealth of information on how to set up your Koinly account in our help guides, but in summary:
Connect all the exchanges, wallets, and blockchains you use via API or by uploading a CSV file
Koinly will calculate your gains, losses, income, and more, as well as identify unrealized gains and losses in your investment portfolio
Preview your tax liability and find unrealized losses in your tax optimization dashboard
Once you’re set up with your exchanges, wallets, and blockchains connected to Koinly, head to the tax report page to see your free tax summary and understand your tax liability.
As you can see in our example, there’s a sizeable gain and, as such, a sizeable tax bill! We want to reduce that tax bill if possible - so we’ll head over to our dashboard to find Koinly’s tax optimization tool.
Over on the tax optimization dashboard, you can see where Koinly really shines. You’ll be able to view different assets, as well as the loss generated if these assets were sold or otherwise disposed of.
These calculations also consider how long you’ve held the asset, so we can understand whether it would impact our short or long-term gains, as investors need to offset these in a particular order.
If we selected all our losses, we can simulate the total losses we’d generate if we sold those assets. In our example, more than $1,400 in losses. We could offset these against long-term gains in order to reduce our overall taxable gains.
Koinly’s tax optimization dashboard can also help you harvest gains. Just toggle on ‘assets with positive gains’ in order to view any unrealized gains. Similarly, you can use the tool to simulate sales and understand how it would impact your tax liability.
Read next: Dive even deeper with our help article.
More resources
Not in the states? We’ve got guides on cutting your tax bill for other countries, including:
FAQs
When do I need to harvest my crypto losses in the US?
The US financial year runs from January 1 to December 31 each year. So you’ll need to realize any losses by disposing of your crypto by December 31 each year in order to reduce your tax bill the following year.
When do I need to harvest my crypto losses in the UK?
The UK financial year runs from April 6th to April 5th the following year. So you’ll need to realize any losses by disposing of your crypto by April 5th at the very latest each year.
When do I need to harvest my crypto losses in Australia?
The Australian financial year runs from July 1 to June 30 the following year. So you need to realize any losses by disposing of your crypto by June 30 each year to reduce your tax bill in October.
When do I need to harvest my crypto losses in Canada?
The Canadian financial year runs from January 1 to December 31. So you need to realize any losses by disposing of your crypto by December 31 in order to reduce your tax bill the following year.
