The Taxpayer Times

Cryptocurrency reporting has become a recurring topic in recent filing seasons. In an earlier article, Crypto Transactions and Tax Returns, I discussed why digital asset activity often creates uncertainty on tax returns, particularly when taxpayers believe that transactions involving small dollar amounts do not require reporting or assume that no reporting is necessary because no information form was received from a broker.

As part of the IRS’s ongoing efforts to address digital asset reporting, the Internal Revenue Service has introduced a new information reporting form: Form 1099-DA, Digital Asset Proceeds From Broker Transactions. Beginning with the 2025 tax year, brokers will use this form to report certain digital asset transactions to taxpayers and to the IRS.

This form is new. It represents a change in how digital asset transactions are reported and tracked within the federal tax system.

This article explains what Form 1099-DA is, why it was introduced, and how it affects the reporting of digital asset transactions for the 2025 tax year.

What Is Form 1099-DA?

Form 1099-DA is an IRS information return used to report gross proceeds from digital asset transactions handled by brokers. It is designed specifically for digital assets and is separate from existing information returns such as Forms 1099-B or 1099-K.

The form applies to transactions involving digital assets such as cryptocurrency and other blockchain-based property when those transactions are facilitated by a broker. When a reportable transaction occurs, the broker reports the transaction to both the taxpayer and the IRS using Form 1099-DA.

The purpose of the form is informational. It does not determine whether a transaction is taxable, nor does it calculate gain or loss. Instead, it provides transaction data that supports accurate reporting on the taxpayer’s income tax return.

When Form 1099-DA Applies

Form 1099-DA applies to digital asset transactions occurring during the 2025 tax year. Although the transactions occur in 2025, the form will generally be issued to taxpayers in early 2026, during the 2026 filing season.

Taxpayers may receive one or multiple Forms 1099-DA, depending on the number of brokers or platforms used during the year. Each broker that has reportable transactions is responsible for issuing its own form.

The introduction of Form 1099-DA does not change the longstanding requirement to report taxable digital asset activity. It changes how that activity is reported to the IRS by third parties.

What Information Is Reported on Form 1099-DA

For the 2025 tax year, Form 1099-DA focuses on gross proceeds from digital asset transactions. Gross proceeds generally represent the total amount received in a sale, exchange, or other disposition of a digital asset.

For this initial reporting year, brokers are not required to report cost basis on Form 1099-DA. As a result, the form alone does not determine whether a transaction resulted in a gain or a loss.

Taxpayers remain responsible for maintaining records that establish:

• When the digital asset was acquired
• How much was paid for it
• When it was disposed of
• The amount received upon disposition

Those details are necessary to complete the taxpayer’s own gain or loss calculations on the tax return.

How Form 1099-DA Fits Into the Tax Return

Form 1099-DA is not filed with the tax return. Instead, it serves as supporting information used to complete the return accurately.

Digital asset dispositions are generally reported on:

• Form 8949, Sales and Other Dispositions of Capital Assets
• Schedule D, Capital Gains and Losses

The amounts reported on Form 1099-DA should be reviewed and reconciled with the taxpayer’s own records. Differences can arise due to timing, fees, transfers between wallets, or incomplete cost basis information.

Receiving a Form 1099-DA does not automatically mean additional tax is owed. It does not mean the IRS has received third-party reporting related to the transaction.

Why the IRS Introduced Form 1099-DA

Digital Asset transactions have grown significantly over the past decade, but third-party reporting has not always kept pace. Form 1099-DA was introduced to create a standardized reporting framework similar to what already exists for securities and other financial transactions.

By using a dedicated form for digital assets, the IRS can more consistently match information reported by brokers with information reported on individual tax returns. This aligns digital asset reporting more closely with existing information reporting systems used throughout the tax code.

What to Watch Going Forward

Form 1099-DA is the first step in a broader digital asset reporting framework. While cost basis reporting is not required for the 2025 tax year, future reporting requirements may expand as IRS guidance and regulations continue to develop.

Taxpayers and practitioners should expect digital asset reporting to remain an evolving area of tax administration, particularly as digital assets become more integrated into financial activity.

Disclaimer

This article is for general information purposes only and is based on IRS administration guidance applicable to the 2025 tax year. It is not intended as tax advice and should not be relied upon as a substitute for professional guidance based on individual facts and circumstances.