A new IRS form already sent the government a dollar figure from your crypto account, and it almost certainly does not tell the story you think it does.
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If you traded crypto last year, a new tax form probably landed in your mailbox this spring. It’s called Form 1099-DA, “Digital Asset Proceeds From Broker Transactions,” and it is the IRS’s first serious look inside your exchange account.
Here is the part almost nobody caught: for 2025 transactions, the form generally reports gross proceeds only. It does not have to show your cost basis or your overall gain or loss. That means the dollar figure your broker sent to the IRS is what you sold for, not what you made.
The clock on the next phase is already running. We are inside the 2026 tax year right now. Cost basis reporting phases begin for transactions in 2026 for certain covered digital assets, and those forms will hit mailboxes in early 2027. The records you keep between now and December 31 decide whether next year’s form agrees with your return.
What Form 1099-DA Actually Is
The rules stem from the Infrastructure Investment and Jobs Act and from final regulations released by Treasury and the IRS that extend long-standing securities reporting concepts to digital assets. In plain English, crypto now gets the same information-return treatment stocks have had for years.
Beginning with transactions on or after January 1, 2025, covered US digital asset brokers must issue Form 1099-DA to both the IRS and customers for reportable sales and exchanges. The first wave of forms was expected during the 2026 filing season. Digital asset transactions still get reported on Form 8949 and summarized on Schedule D, the same place stock sales go. The IRS also has proposed regulations allowing brokers to furnish Form 1099-DA statements electronically without a paper option, effective for statements due on or after January 1, 2027, so expect these to arrive by email or portal download, not certified mail.
Why the Form Can Overstate What You Owe
Think of a 1099-DA the way you would think of a stock 1099-B with the basis field left blank. Useful, but incomplete. Proceeds are what the buyer paid. Profit is proceeds minus what you paid to acquire the coin. If you copy the proceeds number onto your return as income, you are very likely overstating what you actually made.
Ignoring the form is worse. The IRS has the same copy. Their systems compare documents automatically, and mismatches generate notices without a human ever looking at whether you actually earned a dollar. A quiet reconciliation on your Form 8949 is what keeps that letter from arriving.
Where the Form and Reality Diverge
- Wallet transfers that look like sales. Moving your own coins between your own wallets is not a taxable event. If a transfer is not properly labeled inside your exchange records, it can still appear on a form as a reportable disposition. This is the single most common way an ordinary holder gets a document implying income they never earned.
- Coverage gaps. The rules apply to defined “brokers,” generally US platforms and certain custodial providers. Foreign exchanges, on-chain swaps through some decentralized protocols, and self-custodied activity may not generate a form. That does not erase the tax. The absence of a 1099-DA is not the absence of a tax obligation.
- Which broker reports. Only the broker that first credits proceeds to your account reports the sale. It prevents double reporting, but it can make the location of a given sale non-obvious when you use more than one platform.
- More than cash-outs are taxable. Trading one cryptocurrency for another, spending crypto on goods or services, and disposing of NFTs are all potentially taxable dispositions. You do not have to convert to dollars to owe tax.
- Income events are separate. Form 1099-DA covers dispositions. Staking rewards, mining, airdrops, hard forks, and payment for services in crypto are income at fair market value when received. Some platforms issue a 1099-MISC or 1099-NEC for those, some issue nothing, and either way they belong on your return.
What to Do Before December 31
Build a master list of every exchange, custodian, and wallet you touched this year, and flag which ones should produce a 1099-DA. Export full transaction history from each exchange now, not next April. Historical access is not guaranteed and platforms shut down, sell, or change policies.
Label wallet-to-wallet transfers as transfers inside whatever ledger or software you use, so future-you does not mistake them for sales. Write down the fair market value of any staking, mining, or airdrop receipts on the day they hit your wallet.
When forms arrive next winter, reconcile them against that complete ledger rather than assuming the form is the whole picture. Anyone with activity spread across multiple exchanges, self-custody, foreign platforms, NFTs, or DeFi should sit across from a preparer who asks about all of it. This is general information, not tax advice.
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