New IRS 1099-DA: Crypto Reporting for 2025 Tax Year

Introducing the Form 1099-DA, "Digital Asset Proceeds from Broker Transactions," a groundbreaking IRS mandate reshaping tax reporting in the digital asset realm. Brokers are now required to report cryptocurrency, NFT, and similar transactions, enhancing transparency and tax compliance.

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This policy takes effect for the 2025 tax year, with reporting commencing in early 2026. Preceding this, reliance on self-reported data often led to reporting discrepancies.

The Objective and Consequences of Form 1099-DA: This form aims to streamline tax filings by standardizing broker-reported transaction details, demanding accurate record-keeping from investors.

Obligated Entities to Issue Form 1099-DA: Defined as brokers, entities spanning digital asset platforms to payment processors must comply, excluding most DeFi platforms and non-custodial wallets.

Recipients of Form 1099-DA: U.S. taxpayers engaging with digital asset transactions via these brokers, including individuals and enterprises trading, mining, or dealing in digital assets, will receive this form in early 2026.

Details Required on Form 1099-DA: Comprehensive transaction information must be reported, such as:

  • Payer and recipient IDs.
  • Transaction specifics: asset name, quantity, date, and proceeds.
  • Cost basis (mandatory post-January 2026 for "covered securities").
  • Holding period and transaction type.
  • Fair Market Value and transaction fees.
  • Wash sales for tokenized securities.

Tax Year-Specific Reporting:

  • 2025 Tax Year: Reporting of gross proceeds is mandatory, but cost basis reporting remains elective.
  • 2026 and Beyond: Brokers must report gross proceeds, cost basis, and detailed transaction history.

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Cost Basis Challenge in 2025: The optional cost basis report poses challenges. Absence of this may assume a zero cost basis, leading to potential underreported income notices. Taxpayers must keep meticulous records of asset-related transactions for accuracy in Forms 8949 and Schedule D.

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Stablecoins and NFTs Special Reporting: Distinct rules apply, including:

  • Stablecoin transactions reported in aggregate for annual transactions surpassing $10,000.
  • Specified NFTs exceeding $600 in annual transactions require aggregate reporting starting in 2025.

Tax Filing Using Form 1099-DA: Information from this form mirrors that from 1099-B stock reports, transferred to Form 8949 and Schedule D. This reconciliation determines capital gains or losses, impacting Form 1040 filings.

Crypto Investors' Guidelines: It's crucial to document every transaction, consider crypto tax software for precision, and consult professionals to navigate evolving regulations.

IRS Digital Asset Reporting: The Form 1040 query on digital assets requires accurate responses, especially with impending Form 1099-DA verification capabilities.

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For assistance with crypto transactions on your tax return, contact us.

Let’s Start a Conversation.
You can count on us for professional guidance along with timely, and reliable tax services. If you’re ready to get started, or just want to start a conversation, then click below.
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