Tax season is about to get a whole lot more complicated for crypto holders. The IRS has unveiled a draft form to track digital asset trades.
On August 8, the IRS released a draft of Form 1099-DA, titled “Digital Asset Proceeds From Broker Transactions.” If approved, this form will enable U.S. taxpayers to report cryptocurrency transactions from 2025 by the April 2026 filing deadline.
The IRS has simplified the reporting requirements for digital asset transactions in the latest draft of Form 1099-DA. Unlike the previous April version, the new form no longer necessitates the identification of the broker type involved in the transaction. Additionally, it has dropped the need for precise transaction times, focusing instead on transaction dates. A notable change is the removal of fields for wallet addresses and transaction IDs, streamlining the reporting process for taxpayers.
IRS Commissioner Danny Werfel stated that the revised form would provide greater clarity for taxpayers, helping them accurately report their digital asset transactions. K&L Gates attorney Drew Hinkes described the latest version of Form 1099-DA as significantly improved, with less data reporting required.
Ji Kim, Chief Legal and Policy Officer for the Crypto Council for Innovation, welcomed these changes, which were advocated by the industry.
Meanwhile, the IRS is seeking public input on the latest draft of Form 1099-DA, which will require brokers to report cryptocurrency transaction data to taxpayers and the agency starting in 2025.
This revised form is a scaled-back version of the April draft, addressing industry concerns about overly burdensome reporting requirements, such as specific transaction times and extensive activity details.
While the IRS has clarified that decentralized exchanges and self-custody wallets will not be subject to these rules, the agency maintains that the new reporting measures are essential for closing the tax gap on cryptocurrency gains.
