What is the tax year?
When filing taxes, understanding the tax season and year is crucial for staying compliant and avoiding penalties. A tax year is the 12-month period in which your income, deductions and credits are recorded for tax purposes.
This period is essential because it defines the timeframe for calculating all your earnings and tax liabilities. In many countries, the tax year aligns with the calendar year, which runs from Jan. 1 to Dec. 31, but this is not always the case. Some countries and businesses may follow a fiscal year, starting and ending on different dates.
The tax year runs from Jan. 1 to Dec. 31 in the United States. Any income you earn within that period is reported in the following year’s tax return. For instance, if you earned income between Jan. 1 and Dec. 31, 2024, you would report that income in your 2025 tax return.
While the calendar year is common, some businesses and countries use a fiscal year. For example, in the UK, the tax year for individuals runs from April 6 to April 5 of the following year. Similarly, many companies might follow a fiscal year, such as April 1 to March 31.
Why tax year matters
Tax year matters because of:
Record-keeping: For accurate tax reporting, keeping track of your earnings, deductions and credits within the defined tax year is crucial. This ensures that you report the correct amount of income and claim eligible deductions or credits.Consistency in accounting: Whether for personal finance or business accounting, using a defined tax year helps maintain consistency in reporting and ensures that all financial transactions are aligned with the same period, simplifying financial analysis and tax compliance.
What is the tax season?
A tax season is the official window during which individuals and businesses file their tax returns for the previous tax year. This filing period can last a few months and is dictated by local tax authorities.
In the US, tax season typically begins in late January and ends on or around April 15 (unless extensions or special rules apply). For example, if you earned income in 2024, you would file your tax return during the 2025 tax season, between late January and April 15, 2025.
If you miss this deadline, you may be subject to penalties or interest charges unless you file for an extension.
Why tax season matters
Tax season is important because of:
Compliance deadlines: Filing your tax return within the designated season is crucial to avoid penalties or interest charges. Tax authorities often impose fines for late submissions, and the longer you delay, the more costly the penalties can become.Paperwork and preparation: Tax season is also a time for taxpayers to gather necessary documents such as W-2 forms, 1099s and other income or deduction records. This period allows individuals and businesses to finalize their deductions, review tax laws and ensure all paperwork is ready for filing their returns. Proper preparation during tax season can help maximize deductions and minimize taxes owed.
In the United States, the W-2 form is issued by employers to report an employee’s wages and the taxes withheld during the year, which is essential for completing individual tax returns.
On the other hand, the 1099 form is used to report various types of income other than wages, such as income from freelance work or interest earned. The 1099 is typically provided by clients or financial institutions, and both forms are crucial for accurately filing taxes during tax season. Employers and payers must send these forms to employees and contractors by Jan. 31 each year.
Key differences at a glance:
Did you know? Some businesses and individuals may choose a fiscal year that doesn’t align with the calendar year. For example, a fiscal year could run from July 1 to June 30.
Major countries’ tax years and filing windows
Some countries follow the calendar year (e.g., the US, Canada, Singapore). Others use fiscal years or different periods (e.g., the UK, India, Australia, Switzerland), with varying filing deadlines and extensions based on local regulations.
Different countries have varied start and end dates for both the tax year and tax season. Below is an overview of selected countries:
Always verify deadlines with official government websites, as dates can change due to policy updates or extraordinary circumstances.
Did you know? The IRS finalized regulations requiring brokers to report gross proceeds from digital asset sales starting in 2025 using Form 1099-DA.
Crypto tax year and filing deadlines: What you need to know
For cryptocurrency, the tax year and filing deadlines are often treated similarly to traditional assets. Still, the specifics can vary depending on the country and how cryptocurrency is classified (e.g., capital gains, income).
Generally, the tax year for crypto follows the same period as traditional assets (e.g., Jan. 1 to Dec. 31 in the US and Canada) but with certain exceptions for crypto-specific rules, such as:
Key considerations for crypto taxation
Tax year: Most countries align the crypto tax year with the calendar year, so if you trade or hold cryptocurrencies, your transactions from Jan. 1 to Dec. 31 are typically reported in your tax filings for the following year.Tax season and deadlines: Crypto-related tax filings are generally made during the same tax season as traditional assets. However, the complexity of crypto transactions (e.g., trading, staking, mining) may require additional reporting and documentation. For example:United States: Cryptocurrency gains are reported as part of your 2024 tax return (filed by April 15, 2025).United Kingdom: Crypto must be reported under the self-assessment system by Jan. 31 after the end of the tax year (April 6 – April 5).Special considerations: Different crypto transactions (like trading, staking or mining) may need to be reported separately, and some countries may have specific guidelines for capital gains, income from mining, or airdrops that must be disclosed in the tax filing. Additionally, cryptocurrency exchanges may send users tax documents like 1099-Ks or 1099-Bs in the US, similar to traditional financial assets.
Crypto tax reporting
Many countries are still updating their regulations to address the complexities of cryptocurrency taxation, so it’s essential to stay updated on national tax authority guidelines and any changes in cryptocurrency regulations.
The table below provides a snapshot of the reporting requirements for crypto in the listed countries, focusing on how taxes are applied based on the type of crypto-related activity (capital gains vs. income).
Also, please note that not all crypto transactions are taxable events. For example, transferring cryptocurrency between wallets or accounts you control is generally considered a non-taxable event, as it does not involve a change in ownership or a realization of gains.
However, this can vary significantly from country to country. In some jurisdictions, even wallet-to-wallet transfers might require reporting if the transferred amount later influences the calculation of gains when a taxable event occurs. It is essential to consult local tax guidelines or a professional adviser to determine which transactions are exempt from taxation in your region
Common mistakes to avoid while reporting crypto taxes
Avoiding crypto tax mistakes requires meticulous record-keeping, accurate classification of gains and income and staying updated on tax regulations.
Here are the common mistakes to avoid while reporting crypto taxes:
Failing to report all transactions: Many taxpayers neglect to report every transaction, including small trades, staking rewards or airdrops, leading to discrepancies and potential audits.Confusing capital gains with income: Mixing up capital gains and income from crypto activities (like mining or staking) can result in incorrect tax reporting. Crypto earned through mining or staking may be considered income, not capital gains.Not keeping proper records: Failing to maintain a detailed record of crypto transactions (dates, amounts, exchanges used) can make it difficult to accurately calculate gains or losses, especially if trading on multiple platforms.Ignoring hard forks and airdrops: Some taxpayers overlook income from hard forks and airdrops. These are considered taxable income at the fair market value when received and must be reported.Not using the correct valuation method: Incorrectly calculating the value of crypto at the time of the transaction, especially during volatile periods, can lead to inaccurate tax filings.Underestimating foreign crypto income reporting: If you trade on foreign exchanges, you may need to report foreign accounts and income, failing which could lead to penalties under international tax reporting laws.Forgetting to report crypto-to-crypto transactions: Swapping one cryptocurrency for another is a taxable event in many countries, and failing to report these trades can lead to errors in your tax filings.Not considering taxation for DeFi gains: DeFi income from liquidity provision, yield farming, or staking can be complicated. Many taxpayers mistakenly assume these are not taxable, which leads to issues down the line.
Countries with low or no crypto taxes (as of March 2025)
Countries like Portugal, Singapore, Germany, Switzerland, and the UAE offer attractive, low or zero crypto tax environments for investors.
As of March 2025, several jurisdictions continue to attract crypto investors with their favorable tax environments:
Portugal: Renowned for its crypto-friendly policies, Portugal still exempts individual crypto capital gains for non-professional traders, making it a top destination for those looking to minimize tax liabilities on digital asset investments.Singapore: With no capital gains tax, Singapore remains an attractive hub for crypto investors. While personal trading benefits from this favorable policy, businesses engaged in crypto-related activities must adhere to standard corporate tax rules.Germany: Crypto held by private investors for more than one year is tax-free in Germany. This rule encourages long-term holding, providing significant tax advantages for investors willing to commit to extended periods.Switzerland: Switzerland’s tax system offers leniency for private crypto investors, as capital gains on personal investments are typically tax-free. However, income from crypto activities may be subject to taxation, and the specific treatment can vary by canton.United Arab Emirates (UAE): The UAE has emerged as a crypto-friendly jurisdiction by offering zero capital gains tax on crypto investments for individuals, attracting global crypto investors seeking a tax-efficient environment.
These countries exemplify some of the most attractive tax regimes for crypto investors as of 2025, though regulations continue to evolve, so it’s essential for investors to stay updated on local guidelines.
