Guides / Taxes & the long game
Crypto Taxes and the New 1099-DA: A Plain-English Primer
What the new form is, what it leaves out, and how to get your numbers square before you file.
This guide has no affiliate links. Sources are numbered and listed at the bottom.
Taxes are like a punch list. If you leave them to the end, they get bigger and more expensive. Crypto taxes are changing, so here's the walk-through in plain English.
First, the basics
- Crypto is property, not cash, to the IRS. Income from digital assets is taxable.[2]
- Selling isn't the only taxable move. Trading one coin for another, spending crypto on goods or services, and paying a transaction fee with crypto all count as disposing of it.[1][2]
- Getting paid in crypto is income. If you take crypto for a job as an independent contractor, it goes on Schedule C. Employee wages paid in crypto go on Form 1040.[2]
- Short-term or long-term depends on how long you held it. One year or less is short-term. More than one year is long-term.[2]
What Form 1099-DA is
Form 1099-DA, "Digital Asset Proceeds From Broker Transactions," is the form brokers like exchanges use to report your crypto sales and trades to you and to the IRS.[1] Think of it as the crypto version of the 1099-B you'd get from a stock brokerage.
One rule matters more than the rest: whether or not you get a 1099-DA, you have to report all income, gains, and losses from crypto on your federal return.[1]
The timeline: what gets reported, and when
| What changes | Starting |
|---|---|
| Brokers report gross proceeds (what you sold for)[2] | Jan. 1, 2025 |
| First statements went out, most without your cost basis. Brokers had to send them by Feb. 17, 2026.[3] | 2025 tax year |
| Brokers report cost basis on certain transactions[2] | Jan. 1, 2026 |
The basis rule has a catch. Brokers only have to report basis on "covered" crypto. That means crypto you acquired after 2025 in an account where the broker held it for you, and kept in that same account until you sold.[4] Everything else is "noncovered," and the broker can leave basis blank.[4]
In plain English, the form for your 2026 taxes (filed in 2027) can still be missing basis for:
- Crypto you bought before 2026, even if you sell it now.[4]
- Crypto you moved into the exchange from another wallet or exchange. It has to be bought in that account and stay there to be covered.[4]
Who won't send you a 1099-DA at all
- Foreign exchanges. The 1099-DA rules generally apply to U.S. brokers, so you may not get a form from an exchange based outside the U.S. Those trades still go on your return.[1]
- DeFi and self-custody. Decentralized (non-custodial) platforms that never hold your crypto aren't covered by these reporting rules, and some foreign brokers aren't required to file either.[2][3]
- Some activities are on hold. Brokers don't have to file 1099-DAs yet for staking, lending, liquidity-providing, and wrapping. Rewards you earn are still income.[2]
Basis: the number you have to bring
Your basis is generally what you paid in U.S. dollars.[2] Your gain or loss is roughly what you sold for minus your basis. If the form only shows what you sold for, it can look like the whole sale was profit. The IRS is clear that you must figure your basis before you file.[1][3]
To work out basis for each sale, the IRS says you'll need:[2]
- What it was. The type of crypto, for example Bitcoin.
- When you got it. The date and time you acquired it.
- How much. The number of units.
- What it was worth then. Fair market value in U.S. dollars when you acquired it.
- The sale side. The date and time, units, and dollar value when you sold or traded it.
Also know that since Jan. 1, 2025, basis is tracked wallet by wallet and account by account, not across everything you own lumped together. The IRS issued Revenue Procedure 2024-28 to help people make that switch.[2]
If basis is missing or wrong on your 1099-DA
- Pull your own records. Download the full transaction history from every exchange and wallet you've used, plus bank statements showing the purchases.
- Put your real basis on Form 8949. For noncovered crypto, enter the correct basis in column (e) when the form shows no basis, or when the basis it shows wasn't reported to the IRS.[5]
- Get wrong forms fixed. If a 1099-DA has incorrect information, ask the issuer (the "Filer" in the top-left corner) for a corrected form. The IRS can't correct it for you.[1]
- Got one you shouldn't have? Contact the issuer right away and keep copies of everything.[1]
- Don't stall. The IRS says not to wait to file your taxes while you sort it out.[1]
Where it goes on your return
- The digital asset question. Form 1040 asks whether you received, sold, exchanged, or otherwise disposed of a digital asset during the year. Answer "Yes" if you sold, traded, spent, or got paid in crypto. If all you did was buy with dollars and hold, or move crypto between your own wallets, the answer is generally "No." Paying a transfer fee in crypto counts as a transaction.[2]
- Form 8949, then Schedule D. Sales and trades of crypto you held as an investment go on Form 8949, Sales and Other Dispositions of Capital Assets.[2] The totals then carry over to Schedule D.
- Digital assets get their own boxes. Form 8949 now has separate checkboxes for digital assets: G, H, and I for short-term, and J, K, and L for long-term. Don't use the old box C or box F for crypto.[5]
- Other crypto income. Staking, mining, and similar income goes on Schedule 1. Crypto you're paid as a contractor goes on Schedule C.[2]
Keep records like you keep receipts
The IRS requires records good enough to back up what you put on your return.[2] Here's a simple system:
- Download a full transaction history (usually a CSV file) from each exchange at least once a year, and before you ever close an account.
- Save every 1099-DA, plus any corrected forms and emails with the issuer.[1]
- Keep a basic log of transfers between your own wallets, so they don't look like sales.
- If you get paid in crypto, write down the dollar value on the day you received it.[2]
Crypto tax software can import exchange and wallet histories and fill out Form 8949 for you. It's worth a look if you have a lot of transactions. Check its numbers against your own records, because the IRS warns that the data behind basis has to be complete and accurate.[3] I'm not recommending any particular product here.
Common mistakes to avoid
- "No form, no tax." Wrong. You report crypto income and gains whether or not you get a 1099-DA.[1]
- Treating the proceeds as profit. If basis is blank, the sale price isn't your gain. Figure your basis first.[1][3]
- Forgetting coin-for-coin trades. Swapping one crypto for another is a disposal, just like selling for dollars.[1][2]
- Forgetting that spending crypto counts. Paying for goods or services with crypto is a disposal too.[2]
- Leaving out foreign or DeFi activity. No form doesn't mean no report.[1][3]
- Checking "No" on the digital asset question when you sold or traded. Read the question carefully.[2]
- Mixing up your transfers. Moving coins between your own wallets isn't a sale. Keep the records to prove it.[2]
- Using the wrong 8949 box. Digital assets go in boxes G through L.[5]
Sources
- IRS, Understanding your Form 1099-DA: https://www.irs.gov/businesses/understanding-your-form-1099-da
- IRS, Digital assets: https://www.irs.gov/filing/digital-assets
- IRS Fact Sheet FS-2025-06, Tax professionals can prepare now to assist their clients with reporting proceeds from certain digital asset transactions (Sept. 25, 2025): https://www.irs.gov/newsroom/tax-professionals-can-prepare-now-to-assist-their-clients-with-reporting-proceeds-from-certain-digital-asset-transactions
- IRS, Instructions for Form 1099-DA (2026): https://www.irs.gov/instructions/i1099da
- IRS, Instructions for Form 8949: https://www.irs.gov/instructions/i8949