Year-End Crypto Tax Planning: Eight Moves to Make Before December 31, 2026

Most of the crypto tax calls I get in March are about things that could only have been fixed in December. Once the year closes, your gains and losses for 2026 are locked in. What's left is reporting them.

There are about seven weeks left in 2026. That's enough time to make real decisions, but only if you start with accurate numbers. Here are the eight moves worth looking at now, in the order I'd look at them, with the New Jersey and New York rules that change the math.

1. Get your cost basis right before you decide anything

Every year-end strategy depends on one number: how much you actually gained or lost on each lot. If your cost basis is wrong, you can harvest a "loss" that turns out to be a gain, or sell a coin you thought was long-term and find out it wasn't.

Crypto basis goes wrong in predictable ways: coins moved between exchanges and wallets, exchanges that closed, DeFi activity your software misread, and transfers counted as sales. Since January 1, 2025, basis also has to be tracked wallet by wallet, not pooled across everything you own (Revenue Procedure 2024-28).

Your exchange's year-end summary won't solve this. Form 1099-DA reports what you sold coins for, and cost basis only for coins bought on or after January 1, 2026 and kept in the same account. For anything older or transferred in, the basis is often blank. Our 1099-DA guide walks through what that does to a return.

If you have years of activity across several platforms, reconciliation can take weeks. That's the reason to start in November rather than the week before you file.

If records are missing or an exchange has shut down, see how cost basis reconstruction works.

2. Harvest losses, and know what New Jersey does with them

If you hold coins worth less than you paid, selling them before December 31 turns a paper loss into a deductible one. Federally, capital losses offset capital gains first, then up to $3,000 of other income ($1,500 if married filing separately), with the rest carried forward with no expiration.

An example

A married couple in Morris County earns $260,000 in salaries. Earlier in 2026 they sold Solana for a $60,000 short-term gain. They still hold Ethereum they bought for $90,000 that's now worth $55,000.

(Figures are illustrative and assume the standard deduction; your actual savings depend on your full return.)

The New Jersey catch. New Jersey only lets losses from selling property offset gains from selling property in the same year. A net loss can't reduce wages and doesn't carry forward. If this couple waited until January to sell, they'd still get the federal benefit over time, but New Jersey would tax the full $60,000 gain for 2026 and the loss would be wasted there. For New Jersey residents with gains already on the books, December is the month that counts. Our page on New Jersey crypto taxes covers the rules in detail.

New York follows the federal treatment: the $3,000 limit and the carryforward both apply on your New York return. See how New York taxes crypto.

Selling and buying back

As of November 2026, the federal wash sale rule (Internal Revenue Code section 1091) applies to stock and securities, not to crypto held as property. Selling at a loss and buying back isn't barred by that rule. A bill to extend it to digital assets cleared the House Ways and Means Committee in September 2026 but has not become law, so check before you act.

Two cautions even under current law. First, keep it a real trade on a real market, with records. Second, it doesn't work with crypto ETFs or other securities, which the wash sale rule already covers.

3. Sell dead tokens instead of abandoning them

Most portfolios have a few tokens that collapsed. It's tempting to leave them in a wallet and claim them as worthless. That usually doesn't work.

• "Worthless" means no value at all. In Chief Counsel Advice 202302011, the IRS said a token that still trades for any amount isn't worthless, even if it's down 99%.
• Abandonment isn't deductible for individuals. The same advice treats abandoning a token as a loss that falls under miscellaneous itemized deductions, which individuals can't claim (the 2025 tax law made that suspension permanent).
• Selling works. Selling the token to an unrelated buyer for whatever it will bring, even a few dollars, creates a capital loss for your full basis. Do it on an exchange or decentralized exchange, and keep the transaction record.

Don't sell to a family member or an entity you control. Losses on sales to related parties are disallowed (section 267).

4. Use the 0% bracket, and watch the one-year mark

Long-term gains can be tax-free federally. For 2026, long-term capital gains are taxed at 0% up to $49,450 of taxable income for single filers and $98,900 for married couples filing jointly. If you're retired, between jobs or having a low-income year, you may be able to sell appreciated coins, pay no federal tax on the gain, and buy back at a higher basis. New Jersey and New York have no lower rate for long-term gains, so the state tax still applies; run the numbers first.

Extra gains can also raise other costs: Affordable Care Act premium credits for 2026, and Medicare premiums two years from now (IRMAA is based on income from two years earlier).

Check holding periods before you sell. Gains on crypto held one year or less are taxed at ordinary rates, up to 37% federally. If a lot you want to sell turns one year old in early January, waiting a few weeks can cut the federal rate on that gain by roughly half. For high earners, the 3.8% net investment income tax applies either way.

5. Choose which coins you're selling, and set it up for 2027

If you don't identify the specific units you're selling, the default is first-in, first-out (FIFO). In a rising market, FIFO sells your oldest, cheapest coins first, which usually means the biggest gain.

Under IRS Notice 2026-20, through December 31, 2026, you can identify the specific units you're selling in your own records, as long as you do it by the time of the sale. That's useful for harvesting: you can pick the high-basis lots that produce a loss, even if you bought the same coin cheaper years ago.

Starting in 2027, for coins held at an exchange, you'll generally need to give the exchange your identification at the time of sale or a standing order (for example, highest cost first). Set that up before January. Otherwise your exchange's default, usually FIFO, will decide for you, and your 1099-DA will report it that way.

6. Give appreciated crypto instead of cash

To charity. If you itemize, donating crypto you've held for more than a year generally lets you deduct its fair market value without paying tax on the gain. That beats selling the coin and donating the cash. A few rules apply:

• Donations of crypto valued at more than $5,000 need a qualified appraisal. The IRS doesn't treat crypto like publicly traded stock for this purpose, so an exchange price isn't enough (Chief Counsel Advice 202302012). File Form 8283 with your return.
• The deduction for appreciated property given to public charities is generally limited to 30% of adjusted gross income, with a five-year carryforward.
• Starting with 2026, itemized charitable deductions only count to the extent they exceed 0.5% of your adjusted gross income, and taxpayers in the 37% bracket get a benefit capped at 35%.
• Many donor-advised funds accept crypto, which lets you take the deduction this year and choose the charities later.
• Don't donate coins that are worth less than you paid. Sell them, deduct the loss, and donate the cash.

To family. You can give up to $19,000 per person in 2026 without using any of your lifetime exemption or filing a gift tax return. The recipient takes over your cost basis, so a gift to an adult child in a low bracket can mean the gain is taxed at their rate when they sell, possibly 0%. For children under 19 (or under 24 if full-time students), the kiddie tax can tax their investment income at your rate, so this works best with adult children. Coins with a loss shouldn't be gifted: the recipient generally can't use your loss.

7. Estimate the tax now, and pay it by January 15

The tax on a crypto gain is owed for the year you sell, even if the market drops afterward and the proceeds are now worth less. Investors who traded profitably and reinvested everything are the ones who find out in April that they owe more than they have in cash.

• Run a projection now. Once your gains and losses are reconciled, estimate your 2026 tax and set the cash aside.
• Check the safe harbor. You generally avoid the federal underpayment penalty if your withholding and estimated payments cover 100% of last year's tax, or 110% if last year's adjusted gross income was over $150,000 ($75,000 if married filing separately), or 90% of this year's tax.
• The fourth-quarter payment is due January 15, 2027 for federal, New Jersey and New York estimated tax.
• Withholding has an advantage. If you have a paycheck, increasing your federal withholding in December can close a gap for the whole year, because withholding is treated as paid evenly over the year. Estimated payments only count from the date you make them.

If the gain came from a big sale earlier in the year, the second and third quarters may already be short. Paying now still reduces the penalty going forward.

8. Check your 2025 return against your 1099-DA

The 2026 filing season was the first with Form 1099-DA, and plenty of 2025 returns were filed without matching the form to the actual transactions. Some overstated gains by reporting sales with zero basis. Others left out sales the IRS now has on record.

• Overpaid? You generally have three years from the date you filed to amend and claim a refund.
• Underreported? Fixing it yourself with an amended return is usually better than waiting for a CP2000 notice or an IRS crypto letter, when you're working to the IRS's deadline instead of yours.

The same reconciliation you do for year-end planning will show whether 2025 needs another look.

A few more things to check before December 31

• Download your records. Pull full transaction histories (CSV) from every exchange and wallet you've used this year, especially any you're closing.
• Staking and other income. Staking rewards, airdrops and mining income are taxable when you receive them (Revenue Ruling 2023-14), even if you never sell. Include them in your projection. See staking, DeFi, mining and NFT taxes.
• Planning a move? If you're leaving New York or New Jersey, when you sell relative to when you move can change which state taxes a large gain.
• Leave a margin. Some exchanges record trades in UTC, and a trade late on December 31 in New Jersey can be stamped January 1. Finish year-end trades a few days early.

Start now

Everything above depends on reconciled numbers, and reconciling complicated crypto activity takes time. January through April is when every CPA firm is busiest, and crypto cleanups don't compress well into filing season. If you want to make decisions this year instead of explaining them next year, now is the time.

Darian Accounting works with crypto investors in New Jersey, New York and nationwide on reconciliation, 1099-DA, year-end planning and returns. Schedule a consultation, or see our crypto tax services.

Other CPAs and attorneys are welcome to reach out too. If a client's crypto activity is outside what you usually handle, we can take on the reconciliation and work alongside you.

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