The IRS has just introduced a temporary tax relief for cryptocurrency holders using centralized exchanges, offering a crucial lifeline as stricter tax regulations loom in 2025.
For many crypto investors, this move could provide some much-needed flexibility, potentially lowering tax bills and easing the transition into a new regulatory era. But what exactly does this mean for you, and how can it impact your 2025 tax filing?
Keep reading to find out how this change could make tax season a little less stressful for crypto holders.
Tax expert Shehan Chandrasekera shared on X that the IRS’s temporary relief is good news for investors, providing more flexibility during this crucial period.
What Are the New IRS Rules?
Starting January 1, 2025, new IRS regulations under Section 6045 will require crypto transactions to follow FIFO (First-In, First-Out) accounting—unless an alternative method, like HIFO (Highest-In, First-Out) or Specific Identification (Spec ID), is chosen. FIFO requires selling the oldest assets first, which could lead to higher taxable gains since older purchases typically have lower costs.
The IRS’s temporary relief allows crypto holders to avoid the default FIFO rule in 2025. Instead, taxpayers can use their own records or tax software to identify specific assets being sold. This flexibility is especially valuable during a bull market, where FIFO could unintentionally result in higher capital gains.
This change gives crypto investors a bit more time and flexibility when it comes to tracking capital gains for the 2025 tax year. It could be a game-changer for many in the crypto community, making tax compliance less overwhelming. For transactions between January 1, 2025, and December 31, 2025, you can document your sales using personal records or tax software, avoiding the default FIFO accounting method. However, from January 1, 2026, you’ll need to choose an accounting method with your broker, or default to FIFO.
Tips for Tax Filing
To simplify the process, tax experts recommend syncing your broker’s accounting settings with your tax software to make sure your records match. This step will help avoid discrepancies during tax filing.
The good news is that you won’t need to file anything with the IRS to benefit from this relief—it will be automatically applied. However, starting in 2026, you’ll need to actively choose your preferred accounting method with your centralized exchange to control your tax strategy.
While the US is working to simplify crypto tax policies, Russia is also exploring ways to use crypto to bypass US sanctions. Stay informed on global crypto regulations to make smart decisions this year.
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