IRS crypto reporting rules set stage for confusing tax season: Here’s what you need to know
New IRS Form 1099-DA reporting for 2025 transactions will only show gross proceeds, forcing taxpayers to manually track cost basis for accurate gain/loss calculations.Summary
The IRS is implementing a new Form 1099-DA reporting system starting this year, requiring crypto brokers like Coinbase to send documentation detailing digital-asset transactions that occurred in 2025. The major complication is that these forms only report "gross proceeds" (the sale value), not the original cost basis, placing the burden on taxpayers to calculate and report their actual gains or losses. Experts warn this will lead to a confusing tax season, especially for investors who frequently move assets across multiple exchanges or wallets, or engage in DeFi transactions, staking, and network fees, all of which are taxable.
While some experts believe the IRS will move slowly initially, others anticipate automated letters or audits due to discrepancies between reported gross proceeds and reported returns. Next year (2026), reporting is expected to simplify as brokers will be required to report both proceeds and cost basis for "covered assets" acquired on or after January 1, 2026. The increased scrutiny might prompt some U.S. traders to consider moving activity offshore, though the global trend toward crypto regulation suggests avoiding reporting is becoming increasingly difficult.
(Source：The Block)