Digital assets, especially Bitcoin, have soared in the US in the past few months following Trump's win. However, earning from these platforms will change quite a bit for investors. For the first time, the IRS will receive reports on these transactions, and investors will need to report them properly.
This works by making centralized crypto trading platforms, including even the digital asset wallet providers and payment processors, responsible for reporting your transactions.
Beginning in 2025, CNN reported that these platforms will monitor your transactions and report to the IRS via a new 1099 form called the 1099-DA. These will be issued to you to include when filing your 2025 taxes by 2026. For the one reported this year, they should arrive by February 2026, alongside other 1099 forms used for dividends or interest.
Keep in mind that although brokers will report your gross sales, they won't report the cost basis or the price at which you bought the crypto, but it will likely be reported in 2026.
Outside of centralized exchanges on decentralized exchanges. The reporting is different. Third-party reporting for these will not begin until 2027. Although these decentralized exchanges will report gross proceeds from your transactions, they will not be able to provide cost-basis information.
Now, if you own a bitcoin ETF, the provider will issue a 1099-B or 1099-DA form reporting the transactions, which will not only be for sales of the ETF shares but also for taxable events happening inside the fund. This might mean that you'll need to calculate your share of gain or loss on these and should get professional tax help in these instances.
Not including this information when filing your taxes will immediately alert the IRS because they already have this information.
Why Tax Crypto?
It's worth noting that the third-party reporting requirements are not instating a new tax on investors in digital assets, per IRS last year.
Rather, it's to improve tax compliance and reduce the number of errors or outright noncompliance. In other words, you will find it easier to correctly report your transactions, and the IRS will be able to get the taxes paid correctly. If you haven't been reporting your crypto transactions, this system will remind you to do so.
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