A Form 1099-DA Beginner’s Guide: Crypto Reporting (2025)

A Form 1099-DA Beginner’s Guide: Crypto Reporting (2025)

Form 1099-DA Beginner’s Guide

For several years, the Internal Revenue Service has indicated that it intended to require taxpayers with cryptocurrency to report their cryptocurrency transactions to the U.S. government. Well, the time is coming as the Internal Revenue Service has introduced a Draft form 1099-DA with instructions for filing to begin in 2026. The form will be required starting in 2026 to report transactions that occurred in 2025. In other words, when taxpayers file their 2025 tax return in 2026, they will have to report their cryptocurrency transactions and will begin receiving a Form 1099-DA, similar to how they may receive a form 1099-DIV or 1099-INT. Let’s walk through the basics of the draft form.

1099-DA Early Release (Draft Form)

While the IRS has released a draft version of the form, this is not the finalized form for use for reporting. As provided by the IRS:

• • • “This is an early release draft of an IRS tax form, instructions, or publication, which the IRS is providing for your information. Do not file draft forms and do not rely on draft forms, instructions, and pubs for filing. We incorporate all significant changes to forms posted with this coversheet. However, unexpected issues occasionally arise, or legislation is passed—in this case, we will post a new draft of the form to alert users that changes were made to the previously posted draft. Thus, there are never any changes to the last posted draft of a form and the final revision of the form. Forms and instructions are subject to OMB approval before they can be officially released, so we post drafts of them until they are approved. Drafts of instructions and pubs usually have some additional changes before their final release. Early release drafts are at IRS.gov/DraftForms and remain there after the final release is posted at IRS.gov/LatestForms. Also see IRS.gov/Forms.”

Key Excerpts from the Instructions

By releasing a draft form early, before the 2025 tax year launches, it provides brokers and other financial professionals an opportunity to understand what the reporting requirements will be. Let’s walk through some of the key portions of the instructions:

Broker Requirements

• • • “Brokers must report proceeds from (and in some cases, basis for) digital asset dispositions to you and the IRS on Form 1099-DA. You may be required to recognize gain from these dispositions of digital assets. Reporting is also required when your broker knows or has reason to know that a corporation in which you own a digital asset that is also stock has had a reportable change in control or capital structure. You may be required to recognize gain from the receipt of cash, services, digital.”assets, or other property that was exchanged for a digital asset that is also the corporation’s stock.”

Who is a Broker?

• • • “A broker includes any person who, in the ordinary course of a trade or business, stands ready to effect sales of digital assets to be made by others. You are considered a broker with respect to sales of digital assets if:

      • You effect dispositions of customers’ digital assets as an agent, a dealer, or digital asset middleman.

      • You are a person that regularly offers to redeem digital assets that were created or issued by you, or

    • Generally, only a U.S. digital asset broker is required to report on Form 1099-DA. A U.S. digital asset broker is a U.S. person (other than a foreign branch or office of such person), or a U.S. branch described in Regulations section 1.1441-1(b)(2)(iv) that is treated as a U.S. person (excluding a territory financial institution) that effects sales of digital assets on behalf of others. See Regulations section 1.6045-1(g)(4)(i)(A). See Widely held fixed investment trusts (WHFITs), later, for rules specific to WHFIT reporting.”

Why Did You Receive a 1099-DA?

• • • “If you received a Form 1099-DA, you generally sold, exchanged, or otherwise disposed of a financial interest in a digital asset and should check the “Yes” box next to the question on page 1 of Form 1040.”

Basis Reporting: 2025 vs. 2026

The reporting requirements become more complex for brokers after 2025:

2025 transactions.

• • • “These instructions provide information for brokers to use to complete Form 1099-DA for each sale a broker has effected in 2025. Brokers are not required to report basis information with respect to sales effected in 2025.’

2026 and beyond—Mandatory reporting of gross proceeds and of basis information for covered securities and voluntary reporting of basis information for noncovered securities.

• • • “For each sale a broker has effected for customers on or after January 1, 2026, of digital assets that are covered securities, the broker must complete Form 1099-DA, as described in For sales effected on or after January 1, 2026.”

    • “For sales of digital assets that are qualifying stablecoins or specified nonfungible tokens (NFTs) a broker has effected for customers on or after January 1, 2026, and for which a broker is using the Optional reporting methods, the broker is not required to report basis information.”

    • “For sales a broker has effected for customers on or after January 1, 2026, of digital assets that are noncovered securities, the broker is not required to report basis information. However, the broker may voluntarily report this information and will not be subject to penalties under section 6721 or 6722 for failure to report or furnish the information correctly if the broker checks box 9 to indicate that the digital assets are noncovered securities.”

How Do Brokers Report the Crypto Transactions?

• • • “Generally, you should report each transaction on a separate Form 1099-DA. However, in the case of a disposition of digital assets in exchange for services provided by the broker (broker fee), the broker may combine the reporting of the transaction to pay for broker fees with the underlying transaction for which the broker fee was charged if the broker fee is paid using the digital asset disposed in the underlying transaction.

    • For example, if a broker effects on behalf of a customer the sale of 1 unit of Digital Asset A for ten units of Digital Asset B (charging 0.1 units of Digital Asset A for the broker’s services), the broker may file one Form 1099-DA to report the customer’s sale of 1.1 units of Digital Asset A. The broker may not combine the reporting of a transaction to pay for broker fees with the underlying transaction for which the broker fee was charged if the broker fee is paid in a digital asset other than the digital asset disposed in the underlying transaction.”

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who did not timely file their international crypto information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist Taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Current Year vs. Prior Year Non-Compliance

Once a Taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, Taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties. 

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for Taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. 

*This resource may help Taxpayers seeking to hire offshore tax counsel: How to Hire an Offshore Disclosure Lawyer.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure.

Contact our firm today for assistance.