Key takeaways
- You'll receive Form 1099-DA for any disposal of cryptocurrency, regardless of whether you had a profit or loss.
- Reporting crypto losses can reduce your tax bill. You can offset gains and deduct up to $3,000 in losses against ordinary income each year.
Do I get Form 1099-DA if I lost money on crypto?
Yes. You'll receive Form 1099-DA from an exchange if you disposed of cryptocurrency in 2025, whether you made or lost money on the transaction.
Exchanges report all disposals to the IRS. This includes sales, trades, and spending transactions that resulted in capital losses.
It’s important to remember that reporting your losses comes with tax benefits. Capital losses offset capital gains and reduce your taxable income.
If your net capital loss for the year exceeds your total capital gain, you can offset up to $3,000 of ordinary income (such as income from your job). Any remaining losses can be carried forward into future tax years.
Why was my capital loss reported as a gain on Form 1099-DA?
For the 2025 tax year, exchanges are not required to track and report cost basis to the IRS. That means your cost basis on Form 1099-DA may be missing/inaccurate.
Typically, this issue happens if you transfer crypto between wallets. Remember, your cryptocurrency exchange has no visibility into transactions on other platforms.
In this case, Alex’s cost basis may be reported "Unknown" on Form 1099-DA. That means his $1,000 capital loss may look like a $2,000 capital gain.
Luckily, there’s an easy fix to this issue. The IRS allows you to report your correct cost basis from cryptocurrency on Form 8949, provided you have supporting documentation. If Alex has proof of his original purchase, he can report a cost basis of $3,000 for this transaction on his tax return.
What do I do with my Form 1099-DA?
Remember, Form 1099-DA is an informational form that is a starting point for reporting your taxes. It is not a final source of truth.
Here’s what you should do once you receive Form 1099-DA:
Review your Form 1099-DA: Verify that the proceeds numbers match your records. These amounts should reflect the fair market value of your crypto at the time of disposal.
Gather records from all platforms: Form 1099-DA only covers one exchange. Collect transaction history from every wallet, exchange, and DeFi platform where you disposed of crypto. Alternatively, you can use crypto tax software to handle this process automatically.
Calculate your cost basis: Find what you originally paid for each crypto you sold or traded. Remember, if your cost basis is wrong on Form 1099-DA, you can simply report the correct cost basis on your 8949.
Complete Form 8949: List each disposal with the correct cost basis, proceeds, and loss on Form 8949. Your proceeds should match Form 1099-DA.
Transfer totals to Schedule D: Once you've completed Form 8949, report your net gain/loss on Schedule D.
How CoinLedger can help
Tracking losses and calculating accurate cost basis across multiple platforms is complicated. CoinLedger handles it automatically.
Connect your wallets and exchanges, and CoinLedger imports all your transactions. The software calculates your cost basis for every disposal, identifies your capital losses, and generates complete tax forms in minutes.
Frequently asked questions
- Do I have to report crypto if I lost money?
- Can crypto losses reduce my taxes?
- What happens if I don't report crypto losses?
- How do I prove my crypto losses to the IRS?
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