Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesEarnWeb3SquareMore
Trade
Spot
Buy and sell crypto with ease
Margin
Amplify your capital and maximize fund efficiency
Onchain
Going Onchain, without going Onchain!
Convert
Zero fees, no slippage
Explore
Launchhub
Gain the edge early and start winning
Copy
Copy elite trader with one click
Bots
Simple, fast, and reliable AI trading bot
Trade
USDT-M Futures
Futures settled in USDT
USDC-M Futures
Futures settled in USDC
Coin-M Futures
Futures settled in cryptocurrencies
Explore
Futures guide
A beginner-to-advanced journey in futures trading
Futures promotions
Generous rewards await
Overview
A variety of products to grow your assets
Simple Earn
Deposit and withdraw anytime to earn flexible returns with zero risk
On-chain Earn
Earn profits daily without risking principal
Structured Earn
Robust financial innovation to navigate market swings
VIP and Wealth Management
Premium services for smart wealth management
Loans
Flexible borrowing with high fund security

How to Write Off Taxes on Crypto Exchange Hacking Losses

Learn about the tax implications of a hacked crypto exchange and how to write off losses on your taxes.
2024-07-07 07:34:00share
Article rating
4.5
114 ratings

Have you recently fallen victim to a cryptocurrency exchange hack, only to find that your coins have been stolen or are now non-existent? Not only can this be a devastating blow to your finances, but it can also have serious tax implications. In this article, we will explore how to navigate the murky waters of tax deductions for hacked cryptocurrency, specifically how to write off taxes on a crypto exchange that got hacked and your coins are now empty.

Understanding the Tax Implications

When it comes to taxes and cryptocurrency, the Internal Revenue Service (IRS) treats virtual currencies as property rather than as traditional currency. This means that any losses incurred as a result of a hack or theft can potentially be claimed as a capital loss on your taxes. However, there are a few important caveats to keep in mind when trying to write off taxes on crypto exchange hacks.

Document the Incident

The first step in writing off taxes on a hacked crypto exchange is to thoroughly document the incident. This includes saving any communication with the exchange, screenshots of your account balances before and after the hack, and any other relevant information. The more evidence you have to support your claim, the better your chances of successfully writing off the losses on your taxes.

Calculate Your Losses

Next, you will need to calculate the amount of your losses resulting from the hack. This can be tricky, especially if the value of the cryptocurrency has fluctuated since the time of the theft. It is important to use the fair market value of the coins at the time they were stolen, not at the time you originally purchased them. This information will be crucial when filing your taxes and claiming the losses.

Report the Losses on Your Taxes

When it comes time to file your taxes, you will need to report the losses from the hacked crypto exchange on your tax return. This will typically involve filling out Form 4684, which is used to report casualties and thefts. You will need to provide detailed information about the incident, the amount of your losses, and any insurance reimbursements you may have received.

Seek Professional Help

If you are unsure about how to proceed or are facing a particularly complex tax situation as a result of a hacked crypto exchange, it may be wise to seek the help of a professional tax advisor. They can provide guidance on how to accurately report the losses on your taxes and ensure that you are taking full advantage of any potential deductions.

Despite the unfortunate circumstances surrounding a hacked crypto exchange and empty coins, there may be a silver lining when it comes to your taxes. By following the steps outlined in this article and seeking professional help if needed, you can potentially write off your losses and lessen the financial impact of the hack.

CBSwap
COINS
CBSwap price now
$0.00
(0.00%)24h
The live price of CBSwap today is $0.00 USD with a 24-hour trading volume of $0.00 USD. We update our COINS to USD price in real-time. COINS is 0.00% in the last 24 hours.

Trending assets

Assets with the largest change in unique page views on the Bitget website over the past 24 hours.

Popular cryptocurrencies

A selection of the top 12 cryptocurrencies by market cap.
Download app
Download app