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Can a Crypto Trading Loss Be Deducted against W-2 Income?

Crypto losses are usually capital losses with a $3,000 ordinary income limit, but Section 475(f) election allows full deduction against W-2 income.
Greeks.Live21.11.25

Can a Crypto Trading Loss Be Deducted against W-2 Income?

Generally, a crypto trading loss is a capital loss, which can only offset capital gains, plus up to $3,000 of ordinary income (like W-2 wages) per year. However, if the trader qualifies for "trader status" and makes the Section 475(f) mark-to-market election, their losses are treated as ordinary losses and can fully offset W-2 income.

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