IRS Crypto Reporting Rules Create Tax Filing Challenges for U.S. Investors

For the 2025 tax year, the U.S. Internal Revenue Service (IRS) mandated that cryptocurrency exchanges report the gross proceeds of digital‑asset sales on Form 1099‑DA. While the agency now sees more transaction data than before, the forms omit the cost basis, forcing taxpayers to reconstruct their own gain calculations.

Survey Highlights Gaps in Reporting

A August survey of 1,000 U.S. crypto investors found that 21% were still waiting for information from an exchange or platform, and one‑in‑five said their 1099‑DA was incomplete or potentially inaccurate.

Missing Cost Basis Complicates Calculations

Exchanges report only the sale amount, not the original purchase price. Taxpayers must therefore determine gains by matching proceeds with their own records of purchases, fees, and transfers across multiple wallets and platforms.

Inconsistent Forms and Late Delivery

Tax professionals reported discrepancies between 1099‑DAs and clients’ transaction histories. Some exchanges omitted trades, used varying statement formats, or delivered forms weeks before the April 15 deadline, leaving little time for reconciliation.

Impact on Tax Software and Manual Entry

Most crypto tax software cannot automatically import 1099‑DA data, requiring manual entry of potentially hundreds of transactions. Experts call for machine‑readable files to streamline the process.

Looking Ahead to 2026

Starting in 2026, brokers will generally be required to report cost basis for covered digital assets, which should reduce the “zero‑basis” problem. However, transfers from other exchanges or private wallets may still fall outside the reporting scope.

Taxpayers are advised to keep detailed records of all crypto activity and verify 1099‑DA figures against their own transaction logs before filing.