Key Takeaways
- Cryptocurrency platforms will start to issue Form 1099-DA in early 2026. The form contains a record of capital gains & losses, and an identical copy is filed with the IRS.
- It’s likely that Form 1099-DA will be inaccurate if you transferred crypto into/out of your exchange.
If you’re buying and selling cryptocurrency in the United States, your exchange will soon issue Form 1099-DA to report your capital gains to the IRS.
In this blog, we’ll break down what Form 1099-DA is and what it means for your cryptocurrency taxes.
What is a Form 1099?
Form 1099 is used to report non-employment income (income you receive outside of your job) to the IRS.
Currently, there are more than 20 different variations of Form 1099. In the past, the versions most commonly used by cryptocurrency exchanges were Form 1099-B, Form 1099-MISC, and Form 1099-K.
For more information, check out our guide to Form 1099 for cryptocurrency.
What is Form 1099-DA (Digital Asset)?
Form 1099-DA (Digital Asset) is a tax form designed specifically to help taxpayers report gains and losses from cryptocurrencies and other digital assets.
Beginning in 2026, certain crypto brokers will be required to issue Form 1099-DA to users for all capital gains and losses. When you receive a Form 1099-DA or another 1099 form, an identical copy is filed with the IRS.
In January 2025, the IRS released a final draft of Form 1099-DA.
What information does Form 1099-DA report?
Form 1099-DA has the information needed to calculate your capital gains and losses. It contains fields on the following:
- Digital asset broker identification
- Your account number
- The name of the digital asset
- The number of units of the digital assets involved in the transaction
- When you received the digital asset (acquisition date)
- When you disposed of the digital asset (sale or disposition date)
- How much you paid for the digital asset (cost basis)
- How much you received for disposing of the digital asset (gross proceeds)
Who receives Form 1099-DA?
If you make a transaction with cryptocurrency that results in a capital gain or loss starting in the 2025 tax year, you should expect to receive Form 1099-DA.
When will I receive Form 1099-DA?
Form 1099-DA reporting requirements went into effect starting from January 1, 2025. That means that cryptocurrency exchanges will start issuing the form to customers and the IRS in the beginning of 2026.
It’s important to remember that many exchanges already report taxable income to the IRS. Currently, cryptocurrency exchanges send a variety of 1099 forms to customers including Form 1099-MISC and Form 1099-B.
Will Form 1099-DA lead to more tax audits?
Form 1099-DA will give more information than ever on cryptocurrency gains and losses to the IRS. According to experts, the introduction of Form 1099-DA could lead to an unprecedented wave of crypto tax audits.
It’s likely that if there’s a discrepancy between how much you paid in tax and what’s been reported to the IRS, you’ll automatically receive a CP2000 warning letter from the IRS.
Failure to address the warning letter will likely result in penalties and potentially an audit.
Who is required to report Form 1099-DA?
All ‘cryptocurrency brokers’ are required to issue Form 1099-DA. Based on the Treasury Department’s guidance, this will include
- Centralized exchanges
- Decentralized exchanges
- Certain wallets that allow users to buy, sell, and trade cryptocurrencies
- Bitcoin ATMs and physical kiosks
While decentralized exchanges like Uniswap currently do not collect KYC information, they likely will need to start collecting this information to comply with Form 1099 reporting requirements.
Who is not required to report Form 1099-DA?
The following parties are not considered cryptocurrency brokers:
- Miners, node operators, other parties who validate transactions on the blockchain
- Software developers who indirectly facilitate transactions through centralized exchanges or smart contracts
These parties are not required to issue Form 1099-DA to users.
Are stablecoins and NFTs reported on Form 1099-DA?
Based on IRS guidance, it’s likely that stablecoin and NFT transactions will be reported to the IRS on Form 1099-DA if your gross proceeds reach the following thresholds:
- Stablecoins: $10,000+
- NFTs: $600+
Remember, you are required to report all of your stablecoin and NFT transactions on your tax return — regardless of whether or not you reach the reporting threshold.
What happens if I don’t report income reported on Form 1099-DA?
Not reporting income on Form 1099-DA on your tax return could lead to serious consequences.
It’s likely that you’ll automatically receive a warning letter from the IRS about your unpaid tax liability. Failure to pay can result in fines, penalties, and even a potential audit.
Why is the IRS creating Form 1099-DA?
In November 2021, the American infrastructure bill was signed into law by President Biden. The bill stated that cryptocurrency exchanges would be required to report their customer’s capital gains and losses to the IRS through 1099 forms.
This law drew criticism from prominent voices in the cryptocurrency ecosystem. Critics said that cryptocurrency’s unique properties make it difficult for exchanges to accurately report their customers’ capital gains and losses.
Form 1099-DA was designed in response to these criticisms. However, Form 1099-DA will not solve the unique problems associated with reporting taxes on crypto (more on this below).
Will Form 1099-DA make it easier for me to file my crypto taxes?
Form 1099-DA may come with a blank cost basis section if ‘the cost or other basis was unknown to the filer’. As a result, if you transferred your cryptocurrency across different wallets and exchanges, it’s your responsibility to track the cost basis for all of your assets.
Due to this, Form 1099-DA may make it difficult for investors who use multiple cryptocurrency platforms to accurately calculate their gains and losses.
For tax purposes, you’ll need to keep a comprehensive record of your cryptocurrency transactions across all of your wallets. For more information, check out our guide to reporting your crypto taxes.
What’s the problem with 1099 forms?
It’s important to remember that in some situations, Form 1099-DA may contain inaccurate information about your capital gains/losses.
Remember, cryptocurrency capital gains are typically calculated through the following formula.
In this case, gross proceeds are how much you received when you disposed of cryptocurrency. Meanwhile, cost basis is how much you paid to acquire your cryptocurrency.
Because investors often transfer their cryptocurrency between wallets, exchanges have trouble tracking cost basis. Consider the example below.
In this case, David should have a capital gain of $5,000. However, Exchange B won’t know his original cost basis. His cost basis will likely be reported on Form 1099-DA as ‘missing’ or ‘unknown’.
In this case, David is responsible for proving that he originally bought his BTC for $10,000. Otherwise, he may be responsible for the full $15,000 of proceeds. As you can imagine, this can cause stress and confusion for taxpayers who haven’t kept complete records of their crypto transactions.
To prevent situations like these, you should complete records of your cryptocurrency transactions. Alternatively, you can use crypto tax software like CoinLedger to track your gains and losses automatically.
Will 1099-DA change how crypto tax reporting works?
In anticipation of mandatory 1099-DA reporting, the IRS now requires that taxpayers use the per-wallet method to track capital gains and losses.
Previously, taxpayers were allowed to use the ‘universal method’ — which assumed all of your cryptocurrency came from the same tax lot.
To better understand the differences between the universal method and the per-wallet method, let’s take a look at an example.
With universal method: With the previous universal method, Brian’s ETH on Exchange A and Exchange B would be treated as one tax lot. If Brian was using the First-In First-Out method, the first ETH he acquired would be the first that he disposes of — regardless of where he originally purchased it. In this case, Brian would report his capital gain as $1,200 ($3,200-2,000).
With per wallet method: With the per wallet method, the ETH on Exchange A and Exchange B are considered two separate lots for tax purposes. Because Brian is selling his BTC on Exchange B, he must use his cost basis for his BTC held on Exchange B. As a result, Brian’s capital gain is $200 ($3,200- 3,000).
The IRS shifted to the per-wallet method so that it would be easier to track taxpayers’ capital gains and losses from each individual cryptocurrency platform.
Even after the shift to the per-wallet method, your Form 1099-DA may still be inaccurate if you transferred crypto across wallets/exchanges. To track your capital gains and losses, you’ll need your original cost for acquiring your cryptocurrency.
Will Form 1099-DA cause issues if I haven’t reported crypto in the past?
If you haven’t reported your crypto taxes in the past, you should submit a crypto tax amendment to avoid potential fines. Once Form 1099-DA requirements go into effect, it’s likely that the IRS will discover your previously unreported cryptocurrency income.
Remember, the IRS is generally lenient to taxpayers who willingly come forward about unreported income.
File your cryptocurrency taxes today
Looking for an easy way to track your cost basis and report your cryptocurrency taxes? CoinLedger can help.
CoinLedger can connect with exchanges like Coinbase and blockchains like Ethereum so that you can file your crypto taxes in minutes. More than 500,000 crypto investors across the globe use CoinLedger to take the stress out of tax season.
Get started with CoinLedger today — there’s no need to enter your credit card details until you’re 100% sure your information is accurate.
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