The 2024 tax year marked a turning point for crypto investors in the United States. The IRS introduced Form 1099-DA, a new reporting document designed to track digital asset transactions and improve tax transparency. It aims to close gaps in crypto tax reporting by ensuring both investors and brokers disclose accurate information.
While the new form simplifies reporting, it also introduces new responsibilities. Understanding what it includes, who needs to file it, and how it impacts your tax obligations will help you stay compliant and avoid potential issues once it takes effect in 2026.
Form 1099-DA (Digital Asset) is a new IRS reporting document created to track cryptocurrency transactions in the United States. It’s designed to ensure accurate reporting of digital asset sales, swaps, and disposals by both taxpayers and brokers. Starting from the 2025 tax year, brokers must issue this form to customers, while investors will use it for filing taxes in 2026.
Also Read: Crypto Tax In USA- Ultimate Tax Guide
Why Is Form 1099-DA Created By the IRS?
The IRS introduced Form 1099-DA to bring greater consistency and transparency to cryptocurrency tax reporting. Before this, crypto gains and losses were often underreported due to unclear rules and lack of third-party documentation.
Strengthening Tax Compliance
Form 1099-DA was introduced under the Infrastructure Investment and Jobs Act (2021) to ensure brokers report users’ crypto transactions directly to the IRS. This shift moves the responsibility from self-reporting by taxpayers to verified reporting by exchanges and other intermediaries.
Reducing Reporting Gaps
Prior to this form, many investors failed to report or miscalculated their crypto income. The new framework helps close these gaps by standardising how digital asset transactions are documented and reported.
Addressing Crypto Market Complexity
Cryptocurrency transactions often occur across multiple wallets and exchanges, making manual recordkeeping difficult. The IRS created this form to help streamline tracking and reduce errors in capital gains calculations.
Encouraging Fair Enforcement
With Form 1099-DA, the IRS can more easily identify unreported transactions or discrepancies. This ensures fair taxation while discouraging intentional non-compliance among investors and trading platforms.
How's It Different From Other 1099s?
While the IRS already uses several 1099 forms for various types of income, Form 1099-DA is the first designed exclusively for reporting digital asset transactions. It accounts for the unique characteristics of cryptocurrencies, such as decentralisation, blockchain-based activity, and token-specific events like forks or airdrops.
Aspect | Form 1099-DA | Form 1099-B | Form 1099-MISC |
Purpose | Reports sales, swaps, and disposals of digital assets | Reports sales of stocks, bonds, and other securities | Reports miscellaneous income such as rewards, royalties, or prizes |
Asset Type | Cryptocurrencies, stablecoins, NFTs, and other digital assets | Traditional financial assets (stocks, ETFs, options) | Non-employee income unrelated to securities or crypto |
Reporting Entity | Crypto brokers, exchanges, and digital asset custodians | Stockbrokers or traditional financial institutions | Businesses or individuals paying for freelance or contractual work |
Unique Features | Includes blockchain data (transaction hash, wallet address, digital asset code) | Reports cost basis and sales proceeds | Tracks income, not capital gains or losses |
IRS Treatment | Recognises crypto as property, not currency | Recognises securities as investments | Recognises income as taxable earnings |
Who Needs To Submit Form 1099-DA?
Not everyone involved in crypto transactions must file this form. The IRS limits the requirement to certain entities defined as digital asset brokers, those in a position to know the identities of the parties involved in a crypto transaction.
Entities Required to File
The IRS categorises the following as brokers required to submit Form 1099-DA:
- Kiosk Operators: Businesses operating Bitcoin ATMs that enable users to deposit or withdraw cryptocurrencies.
- Digital Asset Exchanges: Both centralised and decentralised platforms facilitating trades or swaps of digital assets.
- Hosted Wallet Providers: Companies that store users’ private keys and manage transactions on their behalf.
- Unhosted Wallet Facilitators: Services that enable transfers for self-custodied wallets while maintaining transaction records.
- Other Intermediaries: Any platform or individual that fits the IRS’s definition of being “in a position to know” transaction details.
Evolving Definition of “Broker”
The term “broker” remains under review. Legal precedents, such as Coinbase’s recent court ruling, have questioned whether self-custodial wallets truly qualify as brokers. The IRS may revise its interpretation before the form 1099-da effective date 2026, potentially narrowing who must comply.
Also Read: How DeFi Earnings Are Taxed in the US?
Who Does Not Need To File Form 1099-DA?
While brokers and exchanges are obligated to file, certain participants in the crypto ecosystem are exempt from submitting this form. The IRS recognises that not every individual or entity involved in blockchain activity has access to transactional or identity data.
Exempt Parties
- Miners and Validators: Individuals or groups verifying blockchain transactions and earning block rewards are not considered brokers.
- Node Operators: Those maintaining blockchain infrastructure without directly managing user trades are excluded.
- Software Developers: Programmers who create or deploy smart contracts, wallets, or blockchain tools are not required to file unless they actively facilitate transactions.
- Independent Validators or Stakers: Participants earning rewards through validation or staking without acting as intermediaries are exempt.
IRS Rationale for Exemption
The IRS aims to ensure fairness by excluding parties who lack access to user identity or transaction-level data. Imposing reporting duties on developers or infrastructure providers would be unfeasible, as they cannot verify who performs each transaction.
What Information is Reported on Form 1099-DA?
The 1099 da crypto form focuses on providing a detailed record of your digital asset transactions to the IRS. Understanding each component of this form will make your crypto tax filing smoother and more accurate. Here’s what you must report:
- Digital Asset Code: Each digital asset will be assigned a unique code by the IRS for identification.
- Box 1a has the Asset Code. Each digital asset receives a specific code created by the IRS for standardised reporting.
- Box 1b has the Asset Name If an asset doesn’t have an assigned code, brokers can manually enter its name instead.
- Acquisition Date: Indicates when the crypto asset was originally purchased or received, helping classify gains as short-term or long-term.
- The acquisition date should be reported in Box 1d.
- Sale or Disposition Date: Records when you sold, swapped, or otherwise disposed of the crypto.
- The disposition date should be reported in Box 1e.
- Cost Basis: Shows how much you paid for the asset. This is crucial for calculating capital gains or losses when disposing of digital assets.
- It is listed in Box 1g of Form 1099-DA.
- Sales Proceeds: Reflects the amount you received from selling or exchanging the asset.
- Box 7a reports proceeds received in cash (e.g., USD)
- Box 1f reports proceeds received in another crypto or asset.
- Transaction ID or Hash: Serves as the blockchain record linking each transaction for verification.
- Wallet Address: Identifies the digital wallet involved in the transaction.
- Type of Proceeds: Distinguishes between cash and non-cash transactions.
- Ledger Confirmation: Indicates whether the transaction was recorded on the blockchain.
Together, these details help the IRS and taxpayers align transaction data for accurate reporting of gains, losses, and taxable income from digital assets.
Example
Does Form 1099-DA Reports Stablecoins And NFTs?
Yes, Form 1099-DA also covers stablecoins and NFTs if your transactions meet certain reporting thresholds set by the IRS.
Stablecoin Transactions
If your total stablecoin sales or redemptions are worth $10,000 or more, they will be reported on Form 1099-DA. This includes stablecoins such as USDT, USDC, and DAI. Even though their value is tied to the US dollar, any profit made from selling or exchanging them still counts as a taxable gain.
Example:
If you buy 10,000 USDC for $10,000 and later sell them for $10,500, that $500 difference is taxable and must be reported.
NFT Transactions
For NFTs (Non-Fungible Tokens), the IRS sets a lower reporting threshold, $600 or more in gross proceeds. If you sell or trade an NFT above this amount, the transaction must appear on your 1099 da form. Like other digital assets, NFT sales may generate capital gains or ordinary income, depending on how you acquired them.
Example:
Selling an NFT you purchased for $300 at $1,000 results in a $700 taxable gain.
Note: Even if your crypto, stablecoin, or NFT transactions fall below these limits, you are still required to report them on your tax return. The IRS expects full disclosure, regardless of whether a 1099-DA is issued. |
Also Read: How Does IRS Tax Stablecoins?
When Does Form 1099-DA Rolls Out?
The form 1099-da effective date 2026 means the IRS will begin using it for the 2025 tax year, and investors will start receiving it in early 2026. This rollout gives brokers and exchanges time to adjust their systems and collect the necessary transaction data.
Also Read: How Are NFTs Taxable in USA?
Potential Problems with Form 1099-DA
While the IRS designed Form 1099-DA to simplify crypto tax reporting, it still comes with practical challenges that both investors and brokers should understand.
Missing or Incomplete Cost Basis
Many brokers may not have complete cost basis data, especially for assets moved between platforms. This can lead to inaccurate profit or loss reporting, requiring taxpayers to manually verify and correct figures before filing.
Self-Transfer Confusion
When investors move crypto between their own wallets or exchanges, brokers might mistakenly report these transfers as taxable events. This could inflate reported income unless corrected by the taxpayer on Form 8949.
Unclear Broker Definitions
The term “broker” is still being refined. Some entities, such as wallet providers or decentralised platforms, may not know if they fall under this category, creating uncertainty about who must report and comply with Form 1099-DA rules.
Foreign Exchange Limitations
Foreign crypto exchanges not serving U.S. customers are not required to issue Form 1099-DA. This can leave American investors trading abroad without complete transaction data, making accurate tax reporting more difficult.
Risk of IRS Audits
Once Form 1099-DA becomes standard, the IRS will more easily detect unreported crypto activity. Any mismatch between your return and the form’s data may trigger review or audit notices, even for minor discrepancies.
How Can KoinX Help With Crypto Tax Reporting in the USA?
As new IRS reporting rules take effect, many U.S. investors struggle to track thousands of crypto transactions across exchanges. Missing cost basis data or misreported transfers can easily lead to tax filing errors. KoinX simplifies this process by automatically syncing your digital assets and generating IRS-compliant tax reports in minutes.
Automatic Data Sync Across 800+ Platforms
KoinX connects with more than 800+ crypto exchanges, wallets, and blockchains, allowing you to auto-import all your trades, transfers, and DeFi activities. This ensures every transaction reported on Form 1099-DA is matched accurately with your own tax records.
Accurate Cost Basis and Gain Calculation
The platform tracks acquisition prices, sale proceeds, and transfer histories in real time to calculate short-term and long-term gains precisely. This eliminates manual errors and helps you verify figures reported by brokers under the new 1099-DA requirements.
Comprehensive, IRS-Ready Tax Reports
KoinX generates detailed, audit-ready tax reports that align with U.S. IRS formats, including Form 8949 and Schedule D. You can download these instantly or share them directly with your accountant to ensure smooth and error-free filing.
Advanced Security and Compliance Tools
All data on KoinX is protected using AES encryption and ISO 27001:2013 certified systems, ensuring your financial records remain secure. You can also track every wallet or exchange in one dashboard, reducing the risk of missing transactions.
Don’t wait until the IRS deadlines approach. Join KoinX today to simplify your crypto tax reporting, verify your Form 1099-DA data, and stay fully compliant with U.S. tax laws. Sign up on KoinX today and experience effortless, accurate, and secure crypto tax filing.
Conclusion
The rollout of Form 1099-DA marks a major step toward transparency in crypto taxation. While it will simplify how transactions are reported, it also adds new responsibilities for investors to track every trade, swap, and wallet transfer accurately.
By understanding how this form works and preparing early, you can avoid IRS discrepancies and ensure smooth tax filing. KoinX helps you automate recordkeeping, verify your 1099-DA data, and stay fully compliant with U.S. reporting rules. Get started with KoinX today and make crypto tax filing simpler, faster, and error-free.
Frequently Asked Questions
When Will Brokers Begin Issuing Form 1099-DA For Crypto Transactions?
Brokers are required to issue Form 1099-DA beginning with digital asset transactions executed on or after 1 January 2025. Those forms will be delivered to taxpayers and the IRS in the following tax season. This timing means that crypto activity from 2025 onward will fall under the new reporting regime
What Types Of Crypto Transactions Are Reported On Form 1099-DA?
Form 1099-DA covers sales, exchanges, or other dispositions of cryptocurrencies and digital assets conducted through brokers. It may include NFTs and qualifying stablecoin trades. The form reports gross proceeds, and in certain instances cost basis, enabling investors to calculate taxable gains or losses for their returns.
What Information Will Be Included On A Form 1099-DA Received By Crypto Users?
The form will feature details such as the gross proceeds from asset dispositions, the type of digital asset involved, transaction dates, account identifiers, and any cost basis information if available. This lets holders reconcile their own records and supports the IRS’s ability to verify reported capital gains or losses.
Who Is Obligated To Issue Form 1099-DA Among Crypto Platforms?
Entities defined as “brokers,” including centralised exchanges, payment processors, or wallet providers that facilitate sales or trades, must issue Form 1099-DA. Platforms that merely provide storage without sales or trades generally are exempt. The designation ensures that intermediaries actively handling asset exchanges carry the reporting burden.
Will Form 1099-DA Increase The Risk Of Crypto Tax Audits?
Yes, the introduction of Form 1099-DA is likely to heighten audit risk because the IRS will obtain direct transaction data from brokers. Any mismatch between what users report and what appears on the form may trigger review. Crypto investors must ensure their tax filings align precisely with broker disclosures to minimise exposure.
