Crypto tax reporting requirements: Staying compliant with IRS rules

Key takeaways

• The IRS treats crypto like property, so your transactions need to be reported when you file taxes.
• Selling, swapping, or earning crypto is taxable.
• Starting in 2025, Form 1099-DA will give you a record of your trades from broker platforms.

What are the requirements for tax reporting on cryptocurrency?

The IRS treats digital assets like property rather than currency, which means they’re taxed much like stocks or real estate. For your crypto tax reporting requirements, this means any time you sell, trade, or earn crypto, you are required to report the transaction on your tax return. Transactions of any size may trigger a reporting obligation, and not paying necessary taxes can lead to penalties and increased audit risk.

This article will explain the basics of crypto tax compliance: what you need to report, which forms to use, and how new rules like the Form 1099-DA will change the process for tax year 2025 and beyond. 

New reporting requirements in Form 1099-DA

The first few years of crypto tax reporting relied heavily on traders keeping their own records and self-reporting. Form 1099-DA, finalized by the IRS in 2025, will be applicable to transactions starting in the 2025 tax year. Platforms classified as brokers under IRS regulations will be required to report transaction details directly to both users and the IRS.

What’s Form 1099-DA and who issues it?

Form 1099-DA (Digital Asset Proceeds from Broker Transactions) is a new IRS tax form designed specifically for crypto. If you’re familiar with Form 1099-B, which brokers use to report sales and exchanges of traditional securities, Form 1099-DA follows a similar structure, but for digital assets. 

Crypto brokers, such as Coinbase, Kraken, and Gemini, as well as other custodial platforms that hold or facilitate sales and exchanges, must file this form with the IRS and send a copy to taxpayers, starting with transactions in 2025.

Timeline of changes

Form 1099-DA crypto reporting is being rolled out in two phases. The phased rollout gives brokers and taxpayers time to adapt to the new requirements.

Here’s how it’s going to go:

• Phase 1 – tax year 2025: Brokers have to report gross proceeds from crypto sales and exchanges on Form 1099-DA. These gross proceeds represent the total amount you received when you sold or traded your crypto; no cost basis is reported to the IRS in 2025, since all assets are treated as noncovered. However, some platforms may still display cost basis information on customer-facing statements if they have the data (e.g., assets both purchased and sold on the same exchange). For example, if you sold $2,000 worth of Bitcoin (BTC), the IRS will only see $2,000 reported on Form 1099-DA, even if your exchange also shows what you originally paid.
• Phase 2 – tax year 2026 and beyond: Starting in tax year 2026, brokers will be required to report both the gross proceeds and cost basis to the IRS, but only for covered digital assets—typically assets acquired on or after January 1, 2026, and held on the same platform. For noncovered assets, including those acquired before 2026 or moved from another wallet, cost basis is not required to be reported to the IRS, but may still appear on user-facing statements if the broker has the data. So, if you sold $2,000 worth of BTC in 2026 that you originally bought for $1,200, your exchange statement might show both numbers, but only covered asset transactions will have both gross proceeds and cost basis reported directly to the IRS.

What’s included on Form 1099-DA

This form provides key details you’ll need to report your digital asset activity:

• Broker information (who issued it) and your account ID
• Dates when assets were sold or traded
• Gross proceeds from each sale
• Cost basis and acquisition dates (mandatory starting in 2026 for covered assets, optional for noncovered assets)

Key changes for investors

New tax reporting requirements mean a smoother tax season if you only trade on a major crypto platform. For tax year 2025, you’ll receive Form 1099-DA showing your sale proceeds. Cost basis will not be reported by brokers in 2025, since all assets are treated as noncovered. However, certain platforms may still provide cost basis information to users when available—for example, if an asset was both purchased and sold on the same exchange or if the customer supplied cost basis data. Starting in 2026, brokers will include cost basis reporting for covered assets, which means your job becomes reconciling their numbers with your own records.

Any crypto activity outside of those platforms still falls under your domain for tax filing. Decentralized finance (DeFi) trades and other off-exchange activities don’t trigger a 1099-DA, but they may still be taxable. Accurate recordkeeping for these transactions is essential to remain compliant.

While properly filing taxes on crypto might sound daunting, especially if you’re a high-volume trader, there are only a few key changes to consider:

• Direct IRS reporting of transaction data: Instead of relying exclusively on your own records, the IRS will receive transaction details directly from brokers through Form 1099-DA.
• Easier reporting for on-platform trades: If you’re using a central crypto exchange, your reporting burden will be lower with Form 1099-DA. Brokers are now in charge of sending your reportable crypto tax information, which you’ll cross-check with your notes. Still, keep in mind that every off-platform sale or trade is your duty to report.
• Limited application of new form: Form 1099-DA only covers trades and sales through custodial platforms where the broker takes possession of your crypto. It doesn’t cover DeFi trades, non-custodial wallets, or peer-to-peer transfers, so you’ll still have to track and report them on your own.

Current crypto tax reporting rules

Since the tax rules for cryptocurrency treat them as property rather than currency, trades and sales are generally reported as capital gains, while earned crypto is treated as income.

If you sell or trade your crypto, what you initially paid and what you receive from the sale or exchange must be reported on your tax return. These details (as well as dates purchased and sold) are reported on Form 8949. The totals then carry over to Schedule D, which summarizes your capital gains and losses for the year.

Earning crypto – rather than purchasing or trading for it – is taxed differently. If you receive coins or tokens from mining, staking, or an airdrop, the fair market value at the time you receive them is reported as ordinary income. How it’s reported depends on the circumstances: it may be treated as business income subject to self-employment tax (e.g., mining as a trade or business) or as other income not subject to self-employment tax (e.g., staking rewards).

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Common taxable crypto events

As you invest in crypto over the year, keep detailed records to remain compliant by tracking what you trade, how much, and when in the following circumstances: 

• Selling crypto for fiat currencies like USD
• Trading one crypto for another, such as swapping Ethereum (ETH) for Bitcoin (BTC)
• Using crypto to buy goods or services
• Earning crypto through mining, staking, or rewards
• Receiving crypto from forks or airdrops

What’s a non-taxable crypto event?

Crypto transactions that are not taxable generally fall into one of the following categories:

• Buying crypto with fiat currency: Purchasing digital assets with fiat currency is not a taxable event. You may answer “No” to the digital assets question on your tax return if your only activity was buying with fiat.
• Transferring crypto between wallets or exchanges you own: Moving your crypto between wallets or into cold storage is not a taxable event. Much like transferring savings between banks, ownership does not change.
• Giving gifts or making charitable donations: If you give cryptocurrency as a gift, you (the giver) generally won’t recognize income, gain, or loss. However, if the value of the gift exceeds the annual exclusion, a gift tax return may be required. Donations of cryptocurrency to qualified tax-exempt organizations are not taxable and may be deductible as charitable contributions.

How to report crypto transactions: 5 steps

Filing taxes for the year’s crypto transactions is just like reporting any other asset exchange, outlined in the following five steps. 

Gather your data

Collect records from all exchanges, wallets, and DeFi platforms you’ve used. Note purchase dates, sale dates, amounts, and fair market values. Crypto portfolio trackers like CoinTracker can consolidate and track all your digital assets to streamline this process.

Review broker forms

Starting with the 2025 tax year, brokers will issue Form 1099-DA for crypto sales and other disposals to show gross proceeds. Cost basis won’t be reported to the IRS in 2025, but some exchanges may include it on your customer statement if they have the data. Compare the 1099-DA with your own records – or use a portfolio tracker like CoinTracker, since off-platform activity won’t appear on the 1099-DA.

Classify your transactions

Separate taxable events (selling, swapping, or spending crypto) from non-taxable ones (buying with fiat or moving coins between your own wallets).

Calculate gains and losses

Use reconciled data to calculate your capital gains and losses. Determine and document your cost-basis method in your books and records before each disposal. If you use specific identification, the lots must be identified contemporaneously; otherwise, FIFO applies by default. Once a transaction is closed, the lot selection cannot be changed retroactively.

File the right forms

While Form 1099-DA reporting begins in 2025, most of the required tax forms remain unchanged: 

• Form 8949 for each disposal, reconciled against your 1099-DA
• Schedule D summarizes total capital gains and losses
• Schedule 1 for income from staking, mining, or airdrops (or Schedule C for income earned within a trade or business)

You still need to report all taxable dispositions on Form 8949, whether you received a 1099-DA or not. There are consequences for not reporting crypto accurately, including potential penalties, interest, and an increased risk of audits.

Confidently file your crypto taxes this year with CoinTracker

The IRS expects you to report crypto sales, swaps, and income like any other asset trading. Keeping good records is the best way to stay compliant when tax season rolls around. Tools like CoinTracker make this process easier by pulling data from your wallets and exchanges and creating clear reports you can use at tax time.

Sign up for a free CoinTracker account and see how simple filing can be.

Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.

FAQ

Do I need to report crypto if I didn’t sell?

If you didn’t sell any crypto in a given year, you won’t need to report simple purchases or transfers. You will have to answer the IRS digital assets question on your return. If your only activity was purchasing with fiat currency, you may answer “No.” If you received, exchanged, or otherwise disposed of digital assets, you must answer “Yes.”

Will I get a 1099-DA for all my crypto trades?

No. Starting in tax year 2025, you’ll get a 1099-DA for trades on broker platforms and centralized exchanges (CEXs). DeFi activity, self-custody wallets, and peer-to-peer exchanges are not included and must be tracked separately.

What if I don’t receive a 1099-DA?

Even if your crypto platform slips up and doesn’t send you a 1099-DA, you’re still responsible for reporting taxable transactions using your own records.