I made ~100k investing in Bitcoin. Afterwards, I learned that I needed to pay capital gains taxes on it in the amount of ~23k (according to Bitcoin and Crypto Taxes).

What are my options in terms of not paying so much gosh darn money?

  • 19
    Tip: if you make less money, you get to pay less tax! Commented Oct 24, 2017 at 18:24
  • 1
    Possible duplicate of How can I reduce my taxes for 2011 Commented Oct 24, 2017 at 18:25
  • 7
    Donate it to charity? Contribute to retirement or medical savings accounts? Be content with the 77K in net profit?
    – D Stanley
    Commented Oct 24, 2017 at 18:35
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    Please add a country tag as tax questions require one. Commented Oct 24, 2017 at 22:23
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    More bad news: The 23k only represents federal taxes. You may owe more to your state and/or city. You should really talk to a tax professional.
    – josh3736
    Commented Oct 24, 2017 at 22:26

4 Answers 4


You can reduce your capital gains taxes in two ways (USA), off the top of my head:

  1. Sell something else at a loss to offset some of the gains
  2. Don't sell until you've held the asset for more than 1 year to qualify for the lower long-term capital gains rate.
  • 3
    Long term capital gains ftw. That is if you trust Bitcoin to hold its price that long.
    – airfishey
    Commented Oct 24, 2017 at 21:21
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    See JoeTaxpayer's answer, too. It's awesome.
    – Rocky
    Commented Oct 24, 2017 at 21:42
  • OP already has long term capital gains rate
    – CQM
    Commented Oct 25, 2017 at 4:35

You need to meet a woman (or man if you are in a state that allows same sex marriage) who has a carried forward loss or other loss that exceeds the $3K/yr they can take against their own income. If they had a loss of $200K some time ago, and are taking $3K/yr, they may still have $100K they can offset with you. Marriages have been based on less than this.

  • 3
    Joe, a tip of the hat to you. What a great answer!
    – Rocky
    Commented Oct 24, 2017 at 21:31
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    You know, I never considered losing a large pile of money as a strategy for attracting a rich spouse. Wonder what the best way to work that into a dating profile is... Commented Oct 24, 2017 at 22:35
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    "a state that allows same sex marriage": You're a little behind the times. That's all the (US) states, as of a couple years ago. There was this Supreme Court case... Commented Oct 25, 2017 at 5:11
  • Yes, I know. Given the current government, I'm not behind, I just worded my answer in case the 2015 ruling is overturned. I'm sorry if that sarcasm didn't come through. Commented Oct 25, 2017 at 10:05
  • Yeah, the sarcasm didn't come through at all. Dangers of a text medium!
    – Brian
    Commented Oct 25, 2017 at 14:57

Ditto Rocky.


  1. Break the sale up over several tax years so that you don't have a spike in your income pushing you into a higher tax bracket.

  2. Don't sell it until you retire, when you're probably in a lower tax bracket. (If you're 20, this may be impractical.)

  3. Get some other deductions, like medical expenses, charity, etc.

Failing that, maybe a couple of other ideas that neither of us thought of, I think the real answer is: suck it up and pay the taxes. If there was a way to reduce your taxes just by checking the right box on a tax form or some such, everybody would do it and the government wouldn't collect any taxes.

  • 1
    "everybody would do it and the government wouldn't collect any taxes." There's nothing wrong with having an impractical dream or two; don't judge. ;) Commented Oct 24, 2017 at 22:41
  • The suggestion to realise the capital gain over several years is a very helpful one that isn't immediately obvious to the investing novice (i.e. I didn't think of it until it was too late for me ;) ). Commented Oct 25, 2017 at 2:52
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    Note: Sometimes there are ways to reduce your taxes and the government expects people to take advantage of them. In that case, not taking advantage is actually paying more tax than you're supposed to. Commented Aug 5, 2020 at 20:59
  • @user253751 Sure. What I was trying to say was, There are ways to arrange your finances to reduce your tax liability, but these usually have pros and cons. There is rarely if ever a "magic" solution where you can reduce your taxes just by checking the correct box on a form or doing something else that is totally painless.
    – Jay
    Commented Aug 6, 2020 at 14:15

If you only have to pay 23k federal taxes on 100k, that means you are in the long term capital gains tax rate, which is the lower of the tax rates available.

First you get your federal income tax marginal tax rate, and then find the matching long term capital gains tax rate. For example, if your marginal federal income tax rate is 28%, your capital gains tax rate would be 15%. Or rather, if the amount of the gain would put you in the 28% rate, then your long term capital gains tax rate is 15%.

You can reduce that by having more losses. If you have anything else invested anywhere that is taking a loss, then you can sell that this year and it will offset the other gains you have realized. The only note is that your losses have to be long term capital losses too.

Tax loss harvesting takes this to an extreme where you sell something at a loss to lock in the tax loss, but you didn't really want to get rid of that investment, so then you buy a nearly identical investment. ie. if you owned shares of "Direxion Tech Sector ETF" and it was at a loss, you would sell that and then immediately buy "ProShares Tech Sector ETF", the competing product that does the exact same thing.

Then there is charity. This still requires spending money and you not having it any longer. If you feel that a cause can use the money more directly than the US government, you can donate an appreciated asset to the charity - not report a gain and also take a charitable deduction.

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