Crypto Tax Reporting Enters a New Phase With Form 1099-DA

TLDR

• Form 1099-DA reports only partial crypto activity, forcing broader tax reconciliation
• Many taxable crypto events stay off 1099-DA, leaving recordkeeping with taxpayers
• Cost basis is non-covered for 2025, making personal records critical for accuracy
• Transfers break broker tracking in 2026, shifting long-term crypto tax risk
• Practitioners must reconcile platforms, wallets, and DeFi to file defensibly

Digital asset compliance enters a new stage in 2026 as Form 1099-DA reshapes how platforms report transactions under expanded Crypto Tax requirements. The new framework sets fresh expectations for practitioners because the form captures only part of a taxpayer’s activity and therefore demands broader reconciliation. The shift marks a turning point for reporting standards as authorities move toward unified digital asset oversight.

New Reporting Rules Reshape Compliance

Form 1099-DA applies updated reporting rules that change how custodial platforms share data, and it introduces information standards similar to legacy brokerage forms. The form excludes several taxable actions, and this gap requires practitioners to review activity that remains outside mandatory reporting. Crypto Tax obligations continue to apply even when custodial reports omit key transactional details.

The form does not cover several categories of digital asset activity, and this exclusion leaves taxpayers responsible for documenting missing events. Some stablecoin and specified NFT actions fall under optional methods, and other steps such as wrapping and lending remain excluded under temporary federal guidance. Therefore, many taxable events still require independent tracking under existing Crypto Tax rules.

Additional omissions occur when taxpayers use digital assets for payments, and custodial brokers only show withdrawals without reporting the related disposition. Activity on foreign exchanges, DeFi protocols, and self-custody wallets also remains outside the reporting regime, and these transactions often affect cost basis on later disposals. Form 1099-DA serves as one reference point rather than a full ledger for Crypto Tax calculations.

Cost Basis Challenges in the First Reporting Year

All 2025 dispositions remain classified as non-covered under the new framework, and brokers do not need to report cost basis for these events. Some platforms may display this information on substitute statements when available, but those figures are not required or always complete for Crypto Tax filings. Therefore, taxpayers must rely on personal records to establish accurate basis data.

The challenges evolve in 2026 when covered asset rules begin for digital assets acquired on or after January 1. Covered status only applies when assets remain within the same custodial account, and any transfer breaks continuity and removes broker tracking. As a result, taxpayers who move assets between wallets must maintain detailed records to support future Crypto Tax reporting.

Digital asset transfers do not require cost basis statements, and brokers often receive no data when users shift assets across platforms. This gap complicates long-term reporting, and it places responsibility on taxpayers to maintain consistent historical records. Proper documentation becomes essential for accurate Crypto Tax compliance in later years.

Guidance for Practitioners Navigating the 2026 Filing Season

Practitioners must begin with a full inventory of client activity across custodial exchanges, foreign platforms, and self-custody environments. This step ensures that Form 1099-DA data can be matched with independent records, and it allows advisors to verify cost basis for each disposition. Crypto Tax filings require practitioners to reconcile custodial reports with off-platform transactions that influence taxable outcomes.

A structured review of books and records remains critical, and crypto tax software outputs can help identify transfer paths and acquisition details. Practitioners must compare reported proceeds with client data to calculate gains and losses using complete and accurate basis information. This alignment supports defensible Crypto Tax reporting that withstands future questioning.

Documentation remains an essential part of professional workflow, because practitioners must record how each transaction was matched before completing Form 8949. The process strengthens transparency, and it prepares taxpayers for potential follow-ups regarding asset lots or reporting assumptions. Consequently, early planning helps establish systems that will guide Crypto Tax compliance for years.

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