US crypto investors struggle with first 1099-DA filing season
New IRS forms report crypto sale proceeds but not cost basis, leaving taxpayers to calculate gains themselves and creating confusion during the 2025 filing season.
Key points
- A survey of 1,000 US crypto investors by Awaken Tax found 21% who filed or planned an extension were still waiting for information from an exchange or platform.
- One in five said their 1099-DA was incomplete or they were unsure it accurately reflected their transactions.
- For 2025, brokers were generally required to report proceeds but not cost basis, so taxpayers must calculate gains and losses themselves.
- Crypto Tax Advisors found discrepancies between clients' 1099-DAs and its own reports, including one client with over $300,000 in stablecoin trades whose form showed under $100,000 in proceeds.
- From 2026, brokers must generally report cost basis for covered digital assets, though assets transferred in from other exchanges or wallets may still fall outside those rules.
US cryptocurrency investors are finding that new IRS reporting rules have made filing their 2025 returns harder rather than easier, CoinTelegraph reports. Brokers are now required to report gross proceeds from certain digital asset sales, but the forms do not include the cost basis investors need to work out their gains.
A survey of 1,000 US crypto investors conducted in August by Awaken Tax found that 21% of respondents who had filed, or planned to file an extension, were still waiting for information from an exchange or crypto platform. A further one in five said their 1099-DA was incomplete or they were unsure whether it accurately reflected their transactions. Taxpayers who filed for an extension have until Oct. 15 to submit.
For 2025, brokers were generally required to report proceeds, meaning how much an asset sold for, but not the cost basis, meaning how much the taxpayer originally paid. Taxpayers must therefore calculate their own gains and losses. Chris Herbst, managing director of CountDeFi tax reporting, told the outlet that for an active trader the reported figure can be many times their real gain, because each sale is counted at full value with no cost against it.
Proceeds reported, basis missing
Tax professionals say they are already seeing problems when clients try to reconcile the new forms with their transaction histories. Sharon Yip, founder of Crypto Tax Advisors, said her firm found discrepancies between the 1099-DAs clients received and the crypto tax reports it prepared. Some forms omitted trades, exchanges used different formats, and some reported cost basis on certain trades but not others, she said. One client had more than $300,000 in stablecoin trades on an exchange in 2025, yet the exchange's 1099-DA showed less than $100,000 in total stablecoin proceeds.
Andrew Duca, founder of Awaken Tax, said customers received 1099-DAs relatively late in the season, pointing to Kraken, which he said did not send any forms to users until two weeks before the April 15 deadline. Kraken did not respond to a request for comment. The IRS says taxpayers must report digital asset income and gains or losses whether or not they receive a 1099-DA, and should use their own records where basis is not reported.
Andrew Gordon, executive director of Digital Asset Tax Action, said taxpayers are constantly struggling to reconcile the forms with their own records. He said most crypto tax software lacks tools to import and reconcile 1099-DA information, and the few that do still require manual entry because brokers did not provide the 2025 forms in a machine-readable format. For active traders, that can mean hundreds of individual entries.
Forms do not match records
From 2026, brokers must generally report cost basis for covered digital assets, which should give taxpayers more information. However, assets transferred to a broker from another exchange or wallet can still fall outside those requirements. Duca advised taxpayers to compare any 1099-DA against their complete transaction history rather than accepting the form's figures.
