Starting January 1, 2025, Coinbase and other custodial brokers must issue a new IRS form that will auto-flag crypto underreporting. Cost basis reporting arrives in 2027.
The IRS is about to get the same data-matching power over crypto trades that it has long held over stocks.
Starting January 1, 2025, custodial brokers – centralized exchanges like Coinbase and Kraken – must collect data for a new tax form called the Form 1099-DA. The IRS will receive those forms during the 2026 filing season, giving the agency the ability to match reported proceeds against what taxpayers claim on their returns.
The requirement traces to the Infrastructure Investment and Jobs Act of 2021. Final Treasury and IRS regulations released in July 2024 spelled out the specifics.
For 2025 transactions, brokers only need to report gross proceeds. Cost basis reporting – the figure that determines actual gain or loss – won't be mandatory until qualifying 2026 transactions, meaning the first returns with that data arrive in 2027.
The gap is meaningful. For the 2026 filing season, taxpayers still must calculate and reconcile their own cost basis. The IRS has classified digital assets as property since Notice 2014-21. Every sale, swap or exchange creates a taxable event.
What is new is the enforcement infrastructure. Platforms including Coinbase are reportedly preparing to issue millions of these forms, transforming crypto tax reporting from a patchwork system into one that resembles traditional securities oversight, tax experts said.
A February 17, 2026 deadline has been set for many 2025 forms. The IRS has said it will send reminders early in the year to ensure both brokers and taxpayers are aware of the new requirements.
One important caveat: decentralized brokers are currently exempt from these reporting requirements. Trades on decentralized exchanges won't generate a 1099-DA. Those trades remain taxable, the IRS has said.
The agency has also indicated it will offer penalty relief for brokers making good-faith efforts to report accurate figures for 2025 transactions. The relief is aimed at brokers, not individual taxpayers who underreport.
Once the IRS has gross proceeds data flowing from major exchanges, any discrepancy between what a broker reports and what a taxpayer claims becomes an automatic red flag, tax experts said. Cost basis reporting starting with 2026 transactions will tighten the net further. At that point, the IRS will have both sides of the equation: what you received and what you paid.
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