How to cash out crypto and convert it to dollars

Step by step

1. 1

   Move the crypto to where you will sell

   If your coins are in your own wallet, send them to your exchange account first: open Receive in the exchange app and copy the address for the same network. Sending costs a network fee, and a blockchain transfer usually cannot be reversed, so check the address twice. Moving crypto between your own wallets and accounts is not taxed, except a network fee paid in crypto, which counts as a sale.

2. 2

   Sell for dollars

   Choose Sell, pick the coin and the amount, and check the total on the confirmation screen. A quick sell costs 1% plus a spread at Kraken, 2% for amounts under $500 in Cash App and 1.5-2.2% in Venmo. On pro platforms an order that waits for your price costs less, for example 0.40% on Kraken Pro.

3. 3

   Withdraw to your bank

   Link a US bank account in the same name as your exchange account. At Kraken an ACH withdrawal is free, starts at $1 and arrives within 2 business days; an instant RTP transfer costs 1.5% (up to $50), and a wire costs $4. Kraken ACH withdrawals are not available to residents of Texas and New York.

4. 4

   Plan for holds and limits

   Platforms can pause withdrawals after a new deposit. At Kraken, withdrawals are blocked for 7 days after an ACH deposit through Plaid, and a card deposit can pause them for 72 hours. How much you can withdraw depends on your verification level.

5. 5

   Work out the tax

   Crypto is property, so a sale creates a capital gain or loss: the sale price minus what you paid, including fees. Held more than one year, the gain is long-term and taxed at 0%, 15% or 20% depending on income; held one year or less, it is taxed at your regular income tax rate. Swapping one coin for another and paying with crypto count as sales too.

6. 6

   Report it on your return

   Answer Yes to the digital asset question on Form 1040, list each sale on Form 8949 and carry the totals to Schedule D. For sales from 2025, platforms send Form 1099-DA, and from 2026 it also shows the cost basis for certain sales. If losses are bigger than gains, you can deduct up to $3,000 a year ($1,500 if married filing separately) and carry the rest forward.