How To Write Off Crypto Transaction Fees To Save On Taxes. #CriptoNews

Cashing out and swapping cryptocurrency often involves transactions fees paid to exchanges or to the underlying protocol. These crypto transaction fees can be paid in either US dollars or in crypto currencies. If captured correctly, these fees can reduce your taxable income and save you on taxes.

Crypto transaction fees can be paid in three forms: US dollars/Fiat, cryptocurrency you are trading, a totally unrelated cryptocurrency to the trade (generally a token issued by an exchange like $BNB)

In this post, let’s first focus on crypto transactions fees paid in US dollars and how you can use them to reduce your tax bill.

Crypto Tax 101

Cryptocurrencies like Bitcoin are treated as property by the IRS (Notice 2014-21). Therefore, whenever you cash out, swap a coin with another coin, or spend coins on goods and services, such transactions result in capital gains (or losses in some cases).

For example, David had 1 Bitcoin (BTC) purchased at $20,000 (cost basis). He sold this BTC for $100,000 in 2025 in a centralized exchange. Assume the exchange did not charge a transaction fee when David cashed out. Here, David will have a gain of $80,000 ($100,000 – $20,000), which is subject to capital gain taxes.

Crypto Transaction Fees Paid in US Dollars or Fiat

Capital gains can be reduced if you incur any transaction fees in the process. Fees paid in fiat are generally deducted from the proceeds, resulting in a lesser gain (an indirect write-off).

Going with our example above, assume the exchange charged a $500 fee from David.

If David properly accounts for the fee, David will have a capital gain of $79,500 [($100,000 – $500) – $20,000]

which is $500 lower than before.

If David has a lot of transactions with fees, capturing fees accurately throughout the year can lead to considerable tax savings.

How To Report Crypto Transaction Fees

The IRS does not expect you to report transaction fees paid in US dollars separately or in a different form. Continuing with our above example, David can directly report the net capital gain of $79,500 on Form 8949 (see below) to get the tax benefit of the $500 transaction fee.

If you are an active cryptocurrency investor, properly capturing crypto transaction fees on every transaction may not be an easy task. Make sure to use a reputed crypto tax software that can help you capture these transaction fees automatically and accurately so you can save on your tax bill.

Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.