Graphic titled '1099-DA Crypto Reporting: What the IRS Will Track in 2026,' with additional explanatory text reading, 'Think crypto isn’t taxed until you cash out? Think again. Swaps, staking, and stablecoins are all taxable—and costly if you get it wrong.' The image shows a man looking concerned while using a laptop displaying '1099-DA Unreported Income Detected.' Behind him, logos representing crypto platforms like Ethereum, Coinbase, and Ledger hover ominously, with the shadowy silhouette of an IRS agent looming in the background, emphasizing the serious consequences of inaccurate crypto tax reporting.

crypto tax education digital assets Jul 31, 2025

IRS 1099-DA Reporting Starts in 2026 — What Crypto Traders Must Report and Why It Matters

Key Takeaways:

The 1099-DA will be issued by U.S.-connected exchanges starting in January 2026, reporting 2025 crypto sales and transfers.
Wallet addresses will be reported, creating a new layer of IRS surveillance.
The first year will report proceeds only—no cost basis—leading to overstating your income to the IRS.
Failing to report the form can result in IRS audits (CP2000 notices) and inflated tax bills.

What Is the IRS 1099-DA Form for Crypto?

Starting January 2026, U.S.-connected crypto exchanges like Coinbase, Kraken, Gemini, and Robinhood will begin issuing a new tax form: the 1099-DA. DA stands for “Digital Assets,” and it functions like other 1099s by reporting taxable events back to the IRS.

What counts as a taxable event? Sales and transfers. Purchases alone won’t be reported because they’re not taxable. Transfers to or from other persons are taxable. Transfers between your own wallets are not. This distinction is not reported to the IRS.

This form is not optional. If you’ve sold or moved crypto off a centralized U.S. exchange, expect to receive one.

What Does the 1099-DA Let the IRS See About Your Crypto?

Because the 1099-DA gives the IRS direct insight into:

Every crypto sale you make on that platform
Every transfer you initiate to an external wallet
The wallet address where you sent funds
The asset and its value at the time of sale or transfer

Even though the IRS won’t get cost basis info in the first year, they’ll still receive large transaction amounts—without context. That opens the door for misleading assumptions about your gains.

In Clinton’s words: “Just big numbers.”

When Will 1099-DA Crypto Reporting Begin and What Will Be Included?

2026: First 1099-DA forms issued (for tax year 2025)
2027 onward: Exchanges expected to include cost basis—if known

In year one, they’ll only report gross proceeds. That means if you sold $250,000 worth of crypto but your cost basis was $240,000, the IRS sees only $250,000. Without the full picture, you’ll need to prove your real gains.

Will Crypto Wallet Transfers Be Reported on the 1099-DA?

Let’s say you transfer $10,000 of BTC from Coinbase to a Ledger wallet. That transfer will be reported—including your Ledgerwallet address.

From there, the IRS could trace wallet-to-wallet movements and create a picture of your full portfolio, across multiple assets and chains.

This includes:

Bitcoin
Ethereum
Any coin supported on the reporting exchange

The IRS won’t know it’s your Ledger, but they’ll know the address. If they choose to follow up, you could be asked to explain those funds.

What Happens If You Don’t Report Your 1099-DA?

Let’s say you get a 1099-DA in 2026. You disagree with the numbers. Or maybe you forget to include it in your tax software. The IRS will notice.

If it’s missing from your return, the IRS may assume you underreported income—and issue a CP2000 Notice, billing you for what they think you owe.

That’s not a bill you want to receive.

Even if you disagree with the 1099-DA, you still have to report it. We’ll cover how to adjust for incorrect info in a follow-up post, but for now—report it first, fix it later.

Does the IRS Collect Wallet Addresses Under 1099-DA Reporting?

Many crypto investors are concerned that wallet addresses are being reported. But the IRS says wallet addresses aren’t personally identifying information.

They say the data is transferred securely. They say it’s kept private.

You decide how much you trust that. (Don’t forget that IRS contractors stole Donald Trump’s tax returns and published them.)

What’s certain is this: over time, the IRS is building a detailed map of your digital holdings.

How CryptoTaxAudit Helps You Defend Against IRS 1099-DA Enforcement

The 1099-DA is just the beginning. The IRS is building a comprehensive surveillance system around your crypto activity—wallets, transfers, trades, and addresses. It’s no longer enough to file. You need to be defended.

At CryptoTaxAudit, we specialize in exactly this. Our team helps crypto investors:

📊 Calculate accurate gains using proven methods that withstand scrutiny
🧾 Prepare compliant, defensible tax returns—no guesswork, no fluff
🛡️ Defend you against IRS notices, audits, and overreaching enforcement tactics

Whether you're holding coins on Coinbase or moving between private wallets and DeFi platforms, we make sure you’re covered.

👉 Don’t wait for the IRS to send you a notice. Visit CryptoTaxAudit.com and secure your portfolio today.

FAQs

Q: Who will receive a 1099-DA?
A: Anyone who sells or transfers digital assets on a U.S.-connected centralized exchange.

Q: What’s reported in 2026?
A: Only gross proceeds from sales and transfers—no cost basis in year one.

Q: Do I need to report the 1099-DA even if I disagree with it?
A: Yes. Failing to report can trigger IRS notices. You can correct the numbers later, but you must include the form.

Q: Does this apply to wallets and DEXs?
A: No. DEXs aren’t required to issue 1099-DAs. But centralized exchanges are, and they will report wallet addresses for transfers.

Q: How can CryptoTaxAudit help me?
A: CryptoTaxAudit helps you calculate your gains, defend your numbers, and prepare for audits before the IRS ever knocks. If you're confused or worried about the 1099-DA, this is the time to act.
👉 Visit CryptoTaxAudit.com to get protected