Form 1099-DA Explained: What Crypto Investors Need to Know in 2026

Starting with the 2025 tax year, the IRS introduced Form 1099-DA, a new reporting form that requires crypto brokers to report your digital asset transactions directly to the tax authority. If you trade crypto on a centralised exchange, this affects you. Here is what you need to know, in plain English.

What Is Form 1099-DA?

Form 1099-DA (Digital Asset Proceeds From Broker Transactions) is issued by brokers, including centralised crypto exchanges, digital asset payment processors and hosted wallet providers, for any sales or exchanges of digital assets from January 1, 2025 onwards. It is similar to the Form 1099-B that stock brokers have used for years. The goal is to give the IRS a standardised, third-party verified record of your crypto activity so taxpayers cannot easily underreport gains.

The form captures your broker's identification details, your account number, the number of digital asset units transferred, transaction dates, transaction amounts, and cost basis information from 2026 onwards.

Who Does It Affect?

Form 1099-DA affects anyone in the US who buys, sells or trades cryptocurrency on a centralised exchange, accepts cryptocurrency as payment for goods or services, earns mining rewards, or earns staking rewards. Staking income may be reported on Form 1099-MISC rather than 1099-DA depending on how the platform handles it.

Importantly, you are required to report your crypto gains and losses whether or not you receive a Form 1099-DA. The form is a reporting tool for the IRS, not a trigger for your tax obligation. If you made a gain, you owe tax on it regardless of whether a form arrives in your inbox.

What Is Not Covered by Form 1099-DA?

Several transaction types are currently outside the scope of 1099-DA reporting or have been deferred by the IRS pending further guidance. Decentralised exchange transactions are excluded because there is no controlling intermediary to act as the reporting broker. Staking transactions, liquidity provider transactions, wrapping and unwrapping, and crypto lending have all been deferred. Qualifying stablecoin exchanges below $10,000 are exempt, specified NFTs below $600 are exempt, and non-US exchange transactions are pending international coordination under the OECD Crypto-Asset Reporting Framework.

Just because a transaction does not appear on your 1099-DA does not mean it is not taxable. You are still responsible for reporting every disposal, regardless of whether a broker filed a form on your behalf.

The Cost Basis Problem and Why It Matters

Here is where things get complicated for active crypto users. For 2025 transactions, brokers were required to report gross proceeds only, not cost basis. That means you received information about what you sold for, but not what you originally paid. You still had to calculate your own gain or loss.

From 2026 onwards, brokers must also report cost basis for covered securities. This sounds helpful but it creates a new problem. Broker records are often incomplete. When you transfer crypto between exchanges or move assets into self-custody, the receiving platform has no record of your original purchase date or price. It sees the deposit, not the history. The broker reports one cost basis to the IRS and your own records show something different.

This mismatch is now written into the transition rules. IRS Notice 2026-20 explicitly acknowledges that broker-reported acquisition dates and basis may differ from taxpayer records for 2026 transactions. The investors most at risk are those who traded on more than one exchange, moved assets to self-custody and back, used DeFi protocols, or have a long transaction history spread across multiple wallets.

FIFO, HIFO and LIFO, Why Your Cost Basis Method Matters

If you do not tell your broker which lot identification method to use, the IRS defaults to FIFO, which stands for First In, First Out. This means your earliest purchased coins are treated as sold first. For most long-term holders, FIFO can create larger taxable gains because older coins typically have a lower cost basis.

There are alternative methods available. HIFO (Highest In, First Out) sells your most expensive coins first, minimising gains and is generally the most tax-efficient approach. LIFO (Last In, First Out) sells the most recently purchased coins first, which can be useful in specific market conditions. Specific Identification gives you full control by letting you choose exactly which lots to sell, but requires the most detailed record keeping.

From 2027 onwards the transition relief expires. If you want to use HIFO or LIFO you need to set this up with each exchange before the end of 2026, or you may default to the broker's FIFO method, which you cannot retroactively change once a sale has been executed.

What You Should Do Right Now

Keep your own records and do not rely solely on exchange statements. Maintain a record of every purchase showing the date, amount, price paid and which wallet or exchange holds the asset. If you use multiple exchanges, consolidate your full transaction history before filing. Crypto tax software can automate much of this work and is worth considering if you have more than a handful of trades per year.

Choose your cost basis method now and set it up with your broker rather than leaving it to filing time. Do not ignore DEX and DeFi transactions just because they are absent from your 1099-DA. Swapping tokens on a decentralised exchange is still a taxable disposal in most jurisdictions. And if your situation is complex, speak to a qualified crypto-savvy accountant. The rules around 1099-DA are genuinely technical and a professional can save you more than their fee.

A Note for Non-US Investors

Form 1099-DA is a US IRS requirement. If you are based in the UK, Australia or the EU, your local tax authority has its own separate reporting framework. HMRC governs crypto tax in the United Kingdom, the ATO handles it in Australia, and rules vary across EU member states. However, if you use US-based exchanges those platforms may still generate 1099-DA data and share it with international tax authorities under information-sharing agreements.

Estimate Your Position Before You File

If you want a quick sense of your capital gains position before speaking to an accountant, the CrypCal tax calculator covers UK, US, Australian and EU rules. It uses manual inputs only with no wallet connection and no data stored, and gives you a rough estimate in under a minute. It is an educational estimate, not tax advice, but it is a useful starting point for understanding what you might owe before you commit to a full tax software subscription.

Try the CrypCal Tax Calculator at calccrypto.com/calculators/tax

This article is for educational purposes only and is not tax advice. Tax rules are complex and change frequently. Always consult a qualified tax professional for advice specific to your situation. Sources: TurboTax Tax Year 2025 guidance, CCN analysis of IRS Notice 2026-20 published May 3 2026, and AICPA Journal of Accountancy Form 1099-DA reporting guide March 2026.