Form 1099-DA: Complete Guide to Crypto Tax Reporting for 2026 Returns

The IRS Form 1099-DA is arriving in late January 2026, and if you traded cryptocurrency in 2025, you need to understand what's coming. For the first time, cryptocurrency exchanges will be required to report your digital asset transactions directly to the IRS, just like brokers report stock transactions on Form 1099-B. This comprehensive guide walks you through everything you need to know about Form 1099-DA, why preparation matters right now, and how to position yourself for accurate tax filing in 2026.

Understanding Form 1099-DA: The New Digital Asset Tax Form

Form 1099-DA, officially titled "Digital Asset Proceeds From Broker Transactions," is the IRS's new standardized form for reporting cryptocurrency and digital asset sales. It signals a major shift in how the IRS will monitor cryptocurrency trading activity.

Who Issues It: Major cryptocurrency exchanges and brokers including Coinbase, Kraken, Gemini, Binance.US, Robinhood Crypto, and other U.S.-based platforms that custody digital assets for customers. If you bought and sold cryptocurrency through any of these exchanges in 2025, you'll likely receive at least one 1099-DA form.

What Gets Reported for 2025 Tax Year (Filed in 2026): This first year focuses on reporting gross proceeds, the total dollar amount you received when you sold crypto in 2025. The 1099-DA form you receive in early 2026 won't include detailed cost basis information for 2025 transactions, which creates both a challenge and an opportunity for you to prepare.

What Changes in 2026 (Filed in 2026): Starting with transactions that occur in 2026 (reported in early 2027), exchanges will be required to report both gross proceeds and cost basis information for "covered digital assets." Cost basis is your original purchase price plus fees, which is critical for calculating your gain or loss. This phased approach gives the IRS time to implement the new reporting system while giving brokers time to integrate cost basis tracking.

Critical Deadlines: When You'll Receive Your 1099-DA

Understanding the timeline is crucial for tax filing preparation. Here are the key dates:

Date	Deadline	Action
January 31, 2026	Initial Deadline	Exchanges must issue 1099-DA to customers
February 15, 2026	Extended Deadline	Some exchanges may have until this date to send forms
February 17, 2026	IRS Filing	Exchanges must file 1099-DA with the IRS
April 15, 2026	Tax Return Due	File your 2025 tax return (unless extended)

What This Means: You'll have approximately 6-8 weeks between receiving your 1099-DA form and the tax filing deadline to reconcile your records, calculate gains and losses, and prepare your return. This is a tight timeline if you're not prepared in advance.

Will You Receive Form 1099-DA?

Not everyone receives a 1099-DA, but most active cryptocurrency traders will. Here's what triggers reporting:

• Crypto-to-Cash Sales: Selling cryptocurrency for U.S. dollars is always reported
• Crypto-to-Crypto Trades: Trading one cryptocurrency for another (e.g., Bitcoin for Ethereum) is reportable
• Crypto as Payment: Using cryptocurrency to purchase goods or services is a taxable sale

What's NOT Reported on 1099-DA (Yet): Several important cryptocurrency activities fall outside the current 1099-DA reporting requirements:

• Peer-to-Peer Transfers: Sending crypto from your own wallet to someone else's wallet (though it's still taxable if it's payment for services or goods)
• DeFi Transactions: Decentralized finance activities like yield farming, liquidity pools, and smart contract interactions aren't reported on 1099-DA
• Self-Custody Trading: If you hold crypto in your own non-custodial wallet and trade through decentralized exchanges, there's no broker to report it
• Airdrops and Forks: Receiving new coins from airdrops or hard forks (though these are taxable events you must report)
• Staking Rewards: Income from staking is taxable but reported differently, not on 1099-DA

Multiple Exchanges = Multiple Forms: If you traded on Coinbase, Kraken, Gemini, and Binance.US in 2025, you'll receive separate 1099-DA forms from each exchange. You must compile all forms to give the IRS a complete picture of your trading activity.

Understanding Your 1099-DA: What Information Is Included

Form 1099-DA contains several key data points. Understanding each one helps you verify accuracy and reconcile against your records.

For 2025 Transactions (Reported in Early 2026):

• Gross Proceeds: The total dollar amount you received when you sold the cryptocurrency
• Transaction Date: The date the sale occurred
• Type of Digital Asset: The specific cryptocurrency (Bitcoin, Ethereum, etc.)
• Asset Quantity: How much of the asset was sold
• Transaction Description: Whether it was a sale, trade, or other transaction type

Starting with 2026 Transactions (Reported in Early 2027): The IRS will require exchanges to also report:

• Cost Basis: Your original purchase price per unit
• Adjusted Basis: Cost basis adjusted for fees and adjustments
• Gain or Loss: Automatically calculated by subtracting basis from proceeds

How to Prepare Now: Action Steps Before Forms Arrive

The biggest mistake crypto investors make is waiting for the 1099-DA form to arrive before organizing their records. By then, you're under time pressure and more likely to make errors. Here's your preparation strategy:

Step 1: Gather All Transaction Records From Every Exchange

Start immediately by downloading transaction history from every cryptocurrency platform you used in 2025. This includes:

• Major exchanges (Coinbase, Kraken, Gemini, Binance.US, etc.)
• Payment apps that support crypto (PayPal Crypto, Square Cash with Bitcoin)
• Peer-to-peer payment apps if you bought/sold crypto
• Crypto lending platforms if you had active trading

What to Export: Most exchanges have CSV or PDF export functions. Download files that include:

• Transaction date and time
• Transaction type (buy, sell, trade, transfer)
• Quantity of cryptocurrency
• Price per unit in USD
• Total amount in USD
• Fees paid
• Remaining balance

Don't Wait: Exchanges don't always maintain historical exports indefinitely, and some platforms make it harder to access old data. Download everything now while records are fresh and easily accessible.

Step 2: Calculate Your Own Cost Basis

Cost basis is your original purchase price plus associated costs. Because 2025 forms won't include this data from multi-platform traders, calculating it yourself is essential.

Why This Matters: Your gain or loss is calculated as: Proceeds - Adjusted Basis = Gain (or Loss). If you're missing cost basis information, you'll overstate your gains or potentially report incorrect losses.

Three Methods for Cost Basis:

1. FIFO (First In, First Out): You sold the oldest cryptocurrency you purchased first. This is the default method if you don't specify otherwise.
2. LIFO (Last In, First Out): You sold the most recently purchased cryptocurrency first. This can minimize taxes in rising markets.
3. Specific Identification: You explicitly choose which specific units you're selling. This requires detailed records but offers the most tax efficiency.

You can generally choose your method and stick with it, but once chosen, it's hard to change for prior years. Most taxpayers use FIFO for simplicity.

Step 3: Organize Multi-Platform Activity

Create a master transaction log that combines activity across all platforms. This should include:

• All buy transactions with date and cost basis per unit
• All sales transactions with proceeds and date
• All transfers between wallets and exchanges (not taxable, but documentation matters)
• Staking rewards or other income (taxable when received, reported separately)
• Airdrops and hard forks (taxable at fair market value when received)

Crypto tax software can help consolidate this. Tools like CoinTracker, Koinly, and TaxBit allow you to import transaction data from multiple exchanges and automatically calculate your gains and losses. While optional, these tools save enormous amounts of time and reduce the risk of errors.

Step 4: Identify Discrepancies Early

Before tax filing season gets overwhelming, reconcile your records. Common issues include:

• Missing Cost Basis: Transactions from closed exchanges or deleted accounts
• Incorrect Categorization: Platform errors classifying transactions as different types
• Missing Exchange Records: Gaps in exported data or incomplete transaction history
• Airdrop/Fork Confusion: Unclear how to value new coins received
• Fee Allocation: Whether all fees were properly included in cost basis

If you find missing data, contact your exchange now. Once tax season arrives in April, response times slow dramatically.

Step 5: Consider Professional Help

Not every crypto investor needs professional assistance, but certain situations warrant consulting a CPA:

• Large Trading Volume: Hundreds or thousands of transactions
• Multiple Exchanges and Wallets: Complex tracking across many platforms
• DeFi Transactions: Yield farming, liquidity provision, or other advanced strategies
• International Exchanges: Using platforms outside the U.S.
• Business Use: Running a cryptocurrency trading business (different tax treatment)
• Prior Year Issues: Uncorrected errors from previous years

For Korean-American Investors: Many Korean-American investors in Los Angeles and the Koreatown area use both U.S. exchanges (Coinbase, Kraken) and Korean exchanges (Upbit, Bithumb). Understanding U.S. reporting requirements while managing international exchange data requires specialized expertise. Bilingual CPAs who understand both Korean business culture and U.S. tax requirements can provide valuable guidance on compliance, optimization, and navigating the IRS's increasingly sophisticated digital asset monitoring.

Don't Make These 1099-DA Mistakes

Learning from others' errors helps you avoid costly mistakes:

1. Filing Before Receiving the Form: The IRS will cross-check what you report against what they receive from exchanges. Filing early without the form risks errors and potential amendments.
2. Assuming the Form Is Complete: Even when your 1099-DA arrives, it may not include all necessary information, especially if you traded across multiple platforms or used non-custodial wallets.
3. Ignoring Small Transactions: Every crypto sale is reportable, regardless of the dollar amount. Missing even $100 transactions can trigger IRS scrutiny.
4. Not Reconciling Multiple Forms: If you used several exchanges, each sends a separate 1099-DA. Failing to coordinate them creates inconsistencies and audit risk.
5. Forgetting Transaction Fees: Exchange fees, network fees, and other costs adjust your cost basis and should reduce your reported gain.
6. Missing Wallet Transfers: Transfers between your own wallets aren't taxable events, but the IRS may see these transactions and want documentation that you own both wallets.
7. Waiting Until April to Start: The form arrives late January. Waiting until March to begin preparation creates unnecessary stress and increases error risk during the busiest tax season period.

Reconciling Your 1099-DA With Your Records

When your 1099-DA form arrives in late January or early February, don't immediately file your tax return. Instead, follow this reconciliation process:

Compare and Verify

• Check that all your sales transactions appear on the form
• Verify dates match your records
• Confirm transaction amounts (gross proceeds)
• Ensure no duplicate reporting if you used multiple exchanges

Calculate Your Gains and Losses

Using your prepared cost basis records and the proceeds reported on 1099-DA, calculate your gain or loss for each transaction. The formula is straightforward:

Proceeds - Adjusted Basis = Capital Gain (or Loss)

Address Discrepancies

If you find errors on the 1099-DA:

• Contact Your Exchange Immediately: Report the error and request a corrected form (Form 1099-DA with a corrected indicator)
• Request Confirmation: Ask for written acknowledgment that they received your correction request
• Document Everything: Keep copies of all communications with the exchange
• Use Your Accurate Records: On your tax return, report accurate information based on your records, not the potentially incorrect 1099-DA

File Accurate Return

The IRS matches reported 1099-DA data against filed returns. If there's a discrepancy, the IRS will send a notice. Having proper documentation of your reasoning (especially cost basis records and communication with exchanges) protects you in case of an IRS inquiry.

Special Considerations for Crypto Investors

Certain situations require additional attention:

International Exchanges: Using non-U.S. exchanges (Upbit, Bithumb in Korea; Kraken in Europe; etc.) means those platforms won't issue 1099-DA forms to you. However, you're still required to report the transactions. You must manually calculate and report gains and losses on Form 8949 and Schedule D.

DeFi Protocols: Decentralized Finance activities aren't currently covered by 1099-DA reporting. You must track these manually and report them accurately. This includes yield farming swaps, liquidity pool transactions, and other smart contract interactions.

NFT Transactions: Depending on the platform, NFT sales may or may not be reported on 1099-DA. Each NFT sale is a taxable event that you must report, whether it appears on a 1099-DA or not.

Staking and Mining Rewards: Income from cryptocurrency staking or mining is taxable when you receive it, calculated at fair market value on the date of receipt. This income is reported separately, not on 1099-DA, but on your Schedule 1 as other income.

Gifts and Donations: Gifting cryptocurrency to someone else is not a taxable event for you (though it is for the recipient when they sell). Donating cryptocurrency to charity can generate a deduction based on fair market value at the time of donation.

Resources for Korean-American Crypto Investors

Many Korean-American investors navigate a unique situation: maintaining accounts on both U.S. exchanges (Coinbase, Kraken) and Korean exchanges (Upbit, Bithumb). Understanding U.S. Form 1099-DA reporting is essential because:

• U.S. Citizens and Residents Must Report All Income: FBAR and FATCA regulations require reporting of foreign financial accounts over $10,000. If you hold cryptocurrency on Korean exchanges, this may trigger reporting requirements.
• Korean Exchanges Don't Issue 1099-DA: Trading on Upbit or Bithumb won't produce 1099-DA forms, but you must still report those transactions to the IRS on your U.S. tax return.
• Currency Conversion Complexity: Trading in Korean won introduces currency conversion gains/losses that must be tracked separately.
• Bilingual Support Available: Los Angeles has CPAs specializing in Korean-American tax issues who understand both U.S. IRS requirements and Korean financial practices. Koreatown-based firms with bilingual expertise can guide you through complex multi-jurisdiction reporting.

The importance of working with someone who understands both cultures and tax systems cannot be overstated. Many Korean business owners in Los Angeles already work with bilingual accountants for their regular business; extending that relationship to crypto tax issues ensures consistency and accuracy.

Helpful Tools and Resources for 1099-DA Preparation

IRS Resources:

• IRS Form 1099-DA Instructions - Official guidance directly from the IRS
• IRS Final Regulations on Digital Asset Reporting - Comprehensive regulatory guidance

Popular Crypto Tax Software:

• CoinTracker - Aggregates transactions from multiple exchanges and calculates gains automatically
• Koinly - Supports DeFi transactions and international exchanges with global tax report generation
• TaxBit - Enterprise-level accuracy, used by many crypto companies and serious investors
• CoinLedger - Straightforward interface focused on U.S. tax compliance

When to Seek Professional Help: If your situation involves more than a few transactions, multiple exchanges, DeFi activity, or international components, working with a CPA specializing in cryptocurrency taxation pays for itself through accurate reporting and potential tax savings.

Your Action Plan: What to Do Right Now

1. This Week: Download transaction history from every cryptocurrency platform you used in 2025
2. Next 2 Weeks: Organize transactions into a master log or import them into crypto tax software
3. By End of January: Calculate cost basis and preliminary gains/losses for each transaction
4. When Form Arrives (Jan 31 - Feb 15): Reconcile your records against the 1099-DA form
5. Address Discrepancies: Contact exchanges immediately if you find errors
6. File by April 15: Complete your tax return with accurate gains and losses reported

Don't Wait: The IRS will have your 1099-DA data by February 17. They will automatically flag any discrepancies between what you report and what they received from brokers. Being prepared in advance eliminates stress and reduces audit risk.

Conclusion: Prepare Now, File with Confidence

Form 1099-DA represents a watershed moment in IRS cryptocurrency oversight. For the first time, the IRS will have direct visibility into your cryptocurrency trading activity through broker reporting. This makes accurate reporting and thorough preparation essential.

The good news: you have time right now to get organized. The bad news: waiting until late January or March creates unnecessary pressure and increases the risk of errors.

Key Takeaway: Gather records now, organize your data now, calculate your gains and losses now. When the 1099-DA form arrives, you'll be able to quickly verify it against your prepared records, address any discrepancies with your exchange, and file your return confidently by April 15.

If your situation is complex multiple exchanges, DeFi transactions, international activity, or significant trading volume professional assistance from a CPA specializing in cryptocurrency taxation is a worthwhile investment. For Korean-American investors in the Los Angeles area, bilingual CPAs with cryptocurrency expertise can guide you through both the technical requirements and any cultural or language considerations.

Ready to get organized? Start this week by downloading your transaction records. Your future self will thank you when tax time arrives.