What Taxpayers Should Know About Digital Asset Reporting
Source: IRS (summarized for educational purposes)
Beginning in the 2025 tax year, many taxpayers engaged in cryptocurrency and other digital asset transactions will start receiving Form 1099-DA, Digital Asset Proceeds from Broker Transactions. This new reporting form reflects the IRS’s broader effort to bring greater clarity and standardization to digital asset taxation.
One important point:
👉 You must report all digital asset income, gains, and losses—whether or not you receive a Form 1099-DA.
Below is a practical, educational overview of how Form 1099-DA works and what taxpayers should expect.
Who Issues Form 1099-DA?
U.S. brokers are required to report gross proceeds—and in some cases, basis information—from digital asset sales and other dispositions.
For 2025, these requirements generally apply to U.S.-based brokers only.
If you use foreign exchanges or platforms, you may not receive a Form 1099-DA from them—but your obligation to report digital asset activity remains the same.
Who Receives Form 1099-DA?
You may receive the Form 1099-DA if you used a broker to:
- Sell or exchange a digital asset
- Convert a digital asset to U.S. dollars or another currency
- Trade one digital asset for another
- Use digital assets to purchase goods or services
- Pay transactions or broker fees with digital assets
In short, any disposition of a digital asset may trigger reporting.
How to Use Form 1099-DA
Use the information on Form 1099-DA—together with your transaction records—to calculate:
- Cost basis
- Capital gains or losses
- Taxable income
Because brokers may not always have your full basis history, keeping detailed personal records remains essential.
If You Receive Form 1099-DA in Error
If you believe the form was issued incorrectly:
- Contact the issuer immediately (listed in the upper-left corner).
- Keep copies of the form and correspondence.
- Do not delay filing your tax return.
Only the issuer—not the IRS—can correct or withdraw the form.
If Your Form Contains Errors
If proceeds, basis, or other information is incorrect:
- Request a corrected Form 1099-DA from the broker.
- Keep both the original and corrected versions for your records.
- File your return on time using the corrected information.
Again, the IRS cannot correct Form 1099-DA; only the issuer can.
Final Reminder
Even if you don’t receive Form 1099-DA, you are still responsible for reporting all taxable digital asset activity.
This new reporting regime is part of a broader IRS effort to promote transparency in the digital asset space.
Author’s Note
This post is for educational purposes only and does not constitute tax or legal advice.
Zaher Fallahi, CPA, MSA, MBA
Tax Compliance & Controversy • Cryptocurrency Reporting • Nationwide Practice
MIT Certificate in Blockchain Technology
🌐 Website: zfcpa.com
📧 Email: zfallahi@zfcpa.com
☎️ Toll-Free: 1-(877)-687-7558