🚨The 1099-DA: What Crypto Traders Need to Know Before 2026 The 1099-DA is a new tax form that U.S. taxpayers will start receiving in January 2026, covering the 2025 tax year. So, what is it—and why should you care? What is the 1099-DA? The “DA” stands for Digital Assets. Like other 1099 forms, it’s designed to report financial activity to the IRS. Specifically, it will show sales and transfers of digital assets—not purchases, since buying crypto isn’t considered a taxable event. These forms will come from centralized exchanges that are based in, or have ties to, the United States. Think: Coinbase, Kraken, Gemini, Uphold, Robinhood, Fidelity, Franklin Templeton, Swan, and possibly firms like Caleb & Brown if they operate U.S. offices. What Gets Reported? Exchanges will not provide a summary total. Instead, they’ll report every individual sale or transfer. That means the IRS will get transaction-level visibility. If you sold or transferred crypto from a U.S.-connected centralized exchange, you will receive a 1099-DA. If you're using DeFi protocols, those platforms are not required to issue 1099-DAs at this time, since they don’t fall under the same reporting rules. Why It Matters The 1099-DA creates a direct data pipeline to the IRS, detailing: • Every crypto sale • Every transfer • Wallet addresses involved For example, if you buy $1,000 of Bitcoin on Coinbase and transfer it to your Ledger wallet, that wallet address will be reported to the IRS. They may not know it's your Ledger—but they’ll know that address is tied to you. Over time, this lets the IRS piece together your entire portfolio by mapping wallet connections and activity across different chains. And this isn’t just for Bitcoin. It applies to all digital assets traded through reportable exchanges. Timeline and Reporting Details • January–February 2026: First 1099-DAs will be issued (for the 2025 tax year). • Year 1: Only the proceeds (sale values) are reported—not the cost basis. • Starting 2027: Exchanges will begin reporting cost basis if they have that data. This means the IRS will receive big numbers for your crypto sales—without knowing if you made or lost money. Unless you report your cost basis yourself, the IRS may assume the full amount is taxable profit. Risk of Inaction If you don’t report the 1099-DA on your tax return—even if the numbers are wrong—the IRS will notice. When a 1099 is issued but not reported on your return, it can trigger an automated CP2000 notice, where the IRS calculates the tax for you based on incomplete info—and sends you the bill. So even if you disagree with the 1099-DA, you must include it on your tax return and then make adjustments as needed. Failing to report it could land you on the IRS's watchlist for crypto underreporting. Privacy & Surveillance Concerns There’s been significant pushback on the inclusion of wallet addresses in these forms. Many feel it's an invasion of privacy. But the IRS has stated that wallet addresses are not personally identifiable and that the data is securely transferred and protected. Still, over time, this gives the IRS a comprehensive view of your crypto behavior—whether you’re using exchanges, wallets, or hybrid setups. Offshore Wallets and Transfers Let’s say you buy crypto on Coinbase—that purchase won't trigger a 1099-DA. But if you transfer it to a private wallet? That will be reported. If you later move that crypto to a different exchange, say Kraken, Kraken will report the deposit—including the wallet address it came from. If you sell on Kraken, that sale will also be reported—but without cost basis, unless Kraken has access to it. This lifecycle—buy, transfer, deposit, sell—will be increasingly visible to the IRS, even if each individual move isn’t taxable. They’ll have the pieces needed to reconstruct your activity and evaluate risk. What About Miners and Validators? Currently, self-mined crypto is not covered under 1099-DA unless you're using a mining service or farm. If so, the service may issue you a 1099-DA reporting the income. Validators might have reporting obligations depending on their legal structure, but there’s still uncertainty. You may not receive a 1099-DA, but you could be required to issue one to others—TBD based on future regulation. How to Prepare If you’re a simple investor who uses one exchange (like Coinbase) and never moves assets off-platform, you’re in the best position. Coinbase will track your cost basis and report both sides of the trade in future years—just like a stockbroker issuing a 1099-B. But most crypto users aren’t that simple. If you: • Use multiple exchanges • Move assets to and from private wallets • Engage in DeFi or on-chain activity ...you’ll need to proactively track your cost basis and prepare for a complex tax filing process. CryptoTaxAudit can help with both gain calculations and reporting strategies to ensure you’re protected, especially as the IRS tightens its surveillance. This isn’t just a new form. It’s the start of a major shift in how crypto is taxed and tracked. The 1099-DA is going to shock a lot of traders—especially those who think they’re flying under the radar. But now is the time to get ahead of it. Please like and share this information. Knowledge is power!!! $btc $eth $sol $xrp $usdt $usdc $doge $hbar $xlm $cro $dot $ada $trx $avax $sui $link $bnb $xtz $algo $render $ltc