Davit Cho
Global Asset Strategist & Crypto Law Expert
π Verified Against: SEC EDGAR Filings, IRS Tax Code Updates, Bloomberg ETF Data
π
Published: January 30, 2026
✉️ Contact: davitchh@proton.me
⚡ 13+ years experience in Global Asset Strategy & Crypto Taxation
Form 1099-DA 2026 Filing Deadline — February 17 Is Closer Than You Think
If you traded crypto in 2025, you're about to receive a tax form you've never seen before — and brokers have until February 17, 2026 to send it.
The IRS officially launched Form 1099-DA (Digital Asset Proceeds From Broker Transactions) for the 2025 tax year, marking the first time in history that cryptocurrency exchanges like Coinbase, Kraken, and Gemini are required to report your trades directly to the federal government.
But here's the problem: Most crypto investors have no idea what this form is, how it works, or what penalties await if they file incorrectly.
⚠️ Critical Tax Season Alert
If you sold, swapped, or spent crypto through a U.S. broker in 2025, you will receive Form 1099-DA by mid-February 2026. Ignoring it or filing incorrectly could trigger IRS audits, penalties starting at $60 per form, and criminal tax evasion charges in extreme cases.
This article breaks down everything you need to know about Form 1099-DA before the deadline hits — from who gets it, what information it contains, how to file correctly, and what to do if your form has errors.
π Table of Contents
- → What Is Form 1099-DA? (The Basics)
- → Who Gets Form 1099-DA in 2026?
- → Broker Reporting vs Self-Reporting (Key Differences)
- → 5 Costly Filing Mistakes That Trigger IRS Audits
- → Step-by-Step: How to File Form 1099-DA Correctly
- → What If Your Form 1099-DA Is Wrong?
- → Penalty Relief Options for 2026
- → FAQ: Form 1099-DA Questions Answered
What Is Form 1099-DA? (The Basics)
Form 1099-DA is the IRS's new standardized tax form for reporting gross proceeds (and eventually cost basis) from cryptocurrency transactions conducted through U.S.-based brokers.
Think of it as the crypto equivalent of Form 1099-B (which stock brokers like Fidelity or Charles Schwab send you for stock trades). The key difference? This is the first year crypto brokers are legally required to report your trades to the IRS.
π️ Key Timeline for 2026 Filing Season
| Date | Event | Action Required |
|---|---|---|
| Jan 1, 2026 | Form 1099-DA reporting goes live | Brokers begin compiling 2025 transaction data |
| Feb 17, 2026 | Deadline for brokers to send Form 1099-DA to taxpayers | You should receive your form by this date |
| Mar 31, 2026 | Deadline for brokers to e-file with IRS | IRS receives all 1099-DA forms electronically |
| Apr 15, 2026 | Tax filing deadline | You must file Form 8949 & Schedule D with Form 1099-DA data |
π‘ Pro Tip: 2025 vs 2026 Reporting Differences
For 2025 tax year (filed in 2026): Form 1099-DA reports gross proceeds only (total amount received from sales).
Starting 2026 tax year (filed in 2027): Brokers will also report cost basis (what you originally paid), making it easier to calculate capital gains.
π What Information Does Form 1099-DA Include?
According to the IRS official guidance (published December 17, 2025), Form 1099-DA contains:
- Gross proceeds from digital asset sales (total amount received)
- Type of transaction (crypto-to-USD, crypto-to-crypto, crypto-to-goods)
- Date of transaction (based on broker's time zone — Coinbase uses Eastern Time)
- Asset type (Bitcoin, Ethereum, stablecoins, NFTs, etc.)
- Covered vs Non-Covered status (determines if broker reports cost basis)
Important: Form 1099-DA does NOT calculate your capital gains for you. You still need to manually calculate cost basis (what you paid originally) and report gains/losses on Form 8949 and Schedule D.
Who Gets Form 1099-DA in 2026?
You'll receive Form 1099-DA if you completed any of these transactions through a U.S.-based crypto broker in 2025:
✅ Transactions That Trigger Form 1099-DA
- Sold crypto for USD or fiat currency (e.g., Bitcoin → USD)
- Swapped one crypto for another (e.g., Ethereum → Solana)
- Used crypto to buy goods/services (e.g., paid for coffee with Bitcoin)
- Paid broker transaction fees with crypto (e.g., paid Coinbase fee in USDC)
- Transferred ownership (e.g., sent crypto as a gift, but reported as disposition)
π U.S. Brokers vs Foreign Exchanges
| Exchange Type | Must Send 1099-DA? | Examples |
|---|---|---|
| U.S.-Based Brokers | YES ✓ | Coinbase, Kraken, Gemini, Robinhood, Cash App |
| Foreign Exchanges | NO ✗ | Binance.com, Bybit, OKX, KuCoin (but you still must self-report!) |
| DeFi Platforms | NO ✗ | Uniswap, Aave, PancakeSwap (no broker = self-reporting required) |
| Self-Custody Wallets | NO ✗ | MetaMask, Ledger, Trezor (you are your own record-keeper) |
⚠️ Critical: Foreign Exchange Users Are NOT Exempt
If you traded on Binance.com, Bybit, or any non-U.S. exchange, you will not receive Form 1099-DA. However, you are still legally required to report all transactions on Form 8949. The IRS can trace blockchain transactions, and failure to self-report can lead to criminal tax evasion charges.
Broker Reporting vs Self-Reporting (Key Differences)
One of the biggest sources of confusion in 2026 tax season: What's the difference between broker-reported transactions (Form 1099-DA) and self-reported transactions?
| Factor | Broker-Reported (Form 1099-DA) | Self-Reported (DeFi, Foreign Exchanges) |
|---|---|---|
| Who Reports? | Broker sends form to you + IRS | You manually report all transactions |
| IRS Visibility | IRS already knows (automatic matching) | IRS only knows if you report it (but can trace blockchain) |
| Audit Risk | HIGH if you underreport or ignore | MEDIUM if you self-report honestly |
| Cost Basis | Not included in 2025 (starts 2026) | You must calculate yourself |
| Penalty for Mismatch | Automatic CP2000 notice (underreporting penalty) | Failure to file penalty (up to 20% + interest) |
π‘ Pro Tip: The IRS Uses Automated Matching
When you file your tax return, the IRS computer system automatically cross-checks your reported income against all 1099 forms received. If your Form 8949 shows lower proceeds than what Coinbase reported on Form 1099-DA, you'll receive a CP2000 notice (proposed tax adjustment) within 12-18 months.
5 Costly Filing Mistakes That Trigger IRS Audits
Based on IRS enforcement data and tax attorney case studies, here are the 5 most common mistakes that trigger audits in crypto tax filing:
❌ Mistake #1: Ignoring Form 1099-DA Entirely
The Error: You receive Form 1099-DA showing $50,000 in gross proceeds, but you don't include it in your tax return because "it's just crypto."
The Penalty: The IRS computer system flags your return for underreporting income. You receive a CP2000 notice proposing additional tax + 20% accuracy penalty + interest backdated to April 15, 2026.
How to Avoid: Always report every transaction shown on Form 1099-DA on Form 8949, even if you had losses.
❌ Mistake #2: Reporting Gross Proceeds as Taxable Income
The Error: Your Form 1099-DA shows $100,000 in gross proceeds, and you mistakenly report this as $100,000 of taxable income (instead of calculating capital gains).
The Penalty: You massively overpay taxes. Example: If your cost basis was $95,000, your actual capital gain is only $5,000 — not $100,000.
How to Avoid: Understand that Form 1099-DA shows gross proceeds (total amount received), not profit. You must subtract cost basis to calculate gain/loss.
❌ Mistake #3: Using Wrong Cost Basis Method (FIFO, LIFO, HIFO)
The Error: You switch between FIFO (First In, First Out) and HIFO (Highest In, First Out) methods inconsistently across tax years.
The Penalty: The IRS considers this tax avoidance manipulation and may disallow your chosen method, forcing you to recalculate everything using FIFO (which could increase your tax bill).
How to Avoid: Pick one method and stick with it consistently. Coinbase allows you to select your historical accounting method, but once confirmed, it cannot be changed.
⚠️ IRS FIFO Relief Extended Through December 31, 2025
The IRS delayed mandatory FIFO cost-basis reporting until 2026, meaning for 2025 tax year, you can still choose LIFO, HIFO, or Specific Identification. But starting January 1, 2026, brokers must default to FIFO unless you specify otherwise in advance.
❌ Mistake #4: Not Reporting Foreign Exchange Transactions
The Error: You traded on Binance.com (foreign exchange) and assume "no 1099-DA = no reporting required."
The Penalty: Willful failure to file can lead to criminal tax evasion charges (up to 5 years in prison under 26 U.S.C. § 7201). The IRS is using blockchain analytics tools (Chainalysis, TRM Labs) to trace unreported transactions.
How to Avoid: Use crypto tax software like CoinTracker, Koinly, or TaxBit to import transactions from all exchanges (foreign and domestic) and generate Form 8949 automatically.
❌ Mistake #5: Filing Before Receiving All Forms
The Error: You file your tax return on February 1, 2026 (before Coinbase sends Form 1099-DA by mid-February).
The Penalty: You'll need to file an amended return (Form 1040-X) after receiving the form, which delays your refund and increases audit risk.
How to Avoid: Wait until after February 17, 2026 to ensure you've received all 1099-DA forms from all brokers.
Step-by-Step: How to File Form 1099-DA Correctly
Here's the exact process for filing crypto taxes with Form 1099-DA in 2026:
✅ Step 1: Gather All Form 1099-DA Forms (Deadline: Feb 17, 2026)
- Download from Coinbase: Account → Documents → Tax Forms
- Download from Kraken: Settings → Tax Center → Download 1099-DA
- Check your email for "Tax Document Ready" notifications
- Make a checklist: List all exchanges you used in 2025 and confirm receipt
✅ Step 2: Export Transaction History from All Platforms
- U.S. Brokers: Download CSV transaction history (in addition to Form 1099-DA)
- Foreign Exchanges: Export full trade history (Binance: Wallet → Transaction History → Generate)
- DeFi Wallets: Use blockchain explorers (Etherscan, Solscan) to download transaction CSVs
✅ Step 3: Calculate Cost Basis (You Must Do This Manually for 2025)
Since Form 1099-DA does not include cost basis for 2025, you must calculate it yourself using one of these methods:
| Method | Best For | Example |
|---|---|---|
| FIFO (First In, First Out) | Long-term holders | You bought BTC at $20K in 2020, $30K in 2023, sold at $90K in 2025 → use $20K basis |
| LIFO (Last In, First Out) | Active traders | Same scenario → use $30K basis (reduces gain) |
| HIFO (Highest In, First Out) | Tax optimization | Same scenario → use highest purchase price to minimize gain |
| Specific Identification | Sophisticated investors | You manually specify which lot you're selling (requires detailed records) |
✅ Step 4: Complete Form 8949 (Capital Gains and Losses)
Form 8949 is where you report every single crypto transaction with:
- Column (a): Description of property (e.g., "0.5 BTC")
- Column (b): Date acquired
- Column (c): Date sold
- Column (d): Proceeds (from Form 1099-DA)
- Column (e): Cost basis (what you paid originally)
- Column (h): Gain or loss (Column d minus Column e)
Pro Tip: If you have hundreds of transactions, you can summarize them in one line on Form 8949 and attach a detailed statement (check "Exception Code A" or "Exception Code B").
✅ Step 5: Transfer Totals to Schedule D
Once Form 8949 is complete, transfer the totals to Schedule D (Capital Gains and Losses):
- Short-term gains/losses (held ≤1 year) → Line 1 of Schedule D
- Long-term gains/losses (held >1 year) → Line 8 of Schedule D
- Calculate net capital gain/loss (this flows to Form 1040)
✅ Step 6: Report on Form 1040 and Submit by April 15, 2026
Final step: Include Schedule D totals on Form 1040 Line 7 (capital gain or loss). Then submit your return via:
- IRS Free File (if AGI <$79,000)
- Tax software (TurboTax, H&R Block, FreeTaxUSA)
- Crypto-specific software (CoinTracker, Koinly, TaxBit) for automated Form 8949 generation
- Tax professional (CPA or Enrolled Agent specializing in crypto)
π‘ Pro Tip: Use Crypto Tax Software to Avoid Errors
Manual calculation of crypto taxes is extremely error-prone if you have 50+ transactions. Tools like CoinTracker, Koinly, or TaxBit can:
✓ Import transactions from 300+ exchanges and wallets
✓ Automatically calculate cost basis using your chosen method
✓ Generate IRS-ready Form 8949 (some even include 1099-DA reconciliation)
✓ Flag potential errors before you file
Cost: $50-$200 depending on transaction volume (deductible as tax preparation expense).
What If Your Form 1099-DA Is Wrong?
According to IRS guidance (updated December 17, 2025), errors on Form 1099-DA are extremely common in the first year of reporting. Here's what to do:
π§ Step 1: Contact the Issuer Immediately
Look at the top left corner of Form 1099-DA under "Filer" to find the broker's contact information. Common issues:
- Wrong name or SSN (e.g., Coinbase used your old name before marriage)
- Incorrect state residency (only correctable issue per Coinbase policy)
- Missing transactions (e.g., broker didn't capture off-platform transfers)
- Duplicate reporting (same transaction reported twice)
π§ Step 2: Request a Corrected Form 1099-DA
If the error is significant (affects taxable amount by >$500), request a corrected Form 1099-DA. The broker must issue:
- A new form marked "CORRECTED" at the top
- Updated information sent to both you and the IRS
- Correction timeline: 2-4 weeks (but don't wait to file your taxes)
π§ Step 3: File Your Tax Return with Correct Information (Don't Wait!)
Critical IRS Guidance: "Don't wait to file your taxes" — even if the corrected form hasn't arrived yet.
⚠️ How to Handle Incorrect Form 1099-DA While Filing
Option 1: File with the correct information based on your own records. Attach a statement to Form 8949 explaining the discrepancy (e.g., "Broker reported $50,000 in proceeds, but correct amount is $45,000 per attached transaction log").
Option 2: If the error is minor (<$100), report the form "as is" to avoid IRS matching issues, but note the discrepancy in your personal records for audit defense.
Option 3: File for an automatic 6-month extension (Form 4868) to buy time for the corrected form (but you still must pay estimated taxes by April 15).
π§ Step 4: Keep All Documentation for 7 Years
Save the following in a secure folder (digital or physical):
- Original Form 1099-DA (even if incorrect)
- Corrected Form 1099-DA (when received)
- All email correspondence with the broker
- Transaction history CSVs from all platforms
- Screenshots of wallet transactions (especially DeFi)
Why 7 years? The IRS has 3 years to audit most returns, but for substantial underreporting (>25% of gross income), they have 6 years. Keep records for 7 years to be safe.
Penalty Relief Options for 2026
Since this is the first year of Form 1099-DA reporting, the IRS has indicated (in private letter rulings to brokers) that they will provide limited penalty relief for good-faith errors. Here's what you need to know:
π‘️ First-Year Penalty Relief (2026 Tax Season Only)
| Situation | Standard Penalty | Relief Available? |
|---|---|---|
| Broker sent late/incorrect Form 1099-DA | $60-$300 per form (broker penalty) | YES — IRS waiving broker penalties for 2025 reporting |
| You filed late due to waiting for 1099-DA | 5% of unpaid tax per month (max 25%) | NO — Must file Form 4868 for extension |
| You underreported due to reasonable cause | 20% accuracy penalty | MAYBE — Must prove "first-year confusion" as reasonable cause |
| You willfully ignored 1099-DA | Up to 75% fraud penalty + criminal charges | NO — No relief for intentional evasion |
π‘️ How to Qualify for Reasonable Cause Exception
If the IRS proposes penalties via CP2000 notice or audit, you can request penalty abatement by proving:
- First-time penalty abatement: You have a clean tax record for the past 3 years (no prior penalties)
- Reasonable cause: You can prove you made a good-faith effort to comply (e.g., "Broker sent incorrect form; I filed based on my own records")
- Reliance on professional advice: A CPA or tax attorney told you to report it a certain way
How to request: File Form 843 (Claim for Refund and Request for Abatement) with supporting documentation.
π‘ Pro Tip: File Form 843 Within 2 Years
You generally have 2 years from the date you paid the penalty to request abatement via Form 843. If you receive a CP2000 notice, respond immediately (within 30 days) to dispute the penalty before paying it.
FAQ: Form 1099-DA Questions Answered
❓ Q1: What if I never received Form 1099-DA but I traded on Coinbase in 2025?
Answer: Contact Coinbase support immediately. Check your account's "Tax Documents" section (sometimes forms are only available digitally, not mailed). If Coinbase confirms they didn't send one (e.g., your trades were below reporting threshold), you still must self-report all transactions on Form 8949.
❓ Q2: Do staking rewards appear on Form 1099-DA?
Answer: No. Form 1099-DA only reports dispositions (sales, swaps, exchanges). Staking rewards are reported on Form 1099-MISC (Box 3: Other Income) if they exceed $600. However, selling staking rewards triggers Form 1099-DA.
❓ Q3: Can I use Form 1099-DA to claim crypto losses?
Answer: Yes! If your cost basis exceeds gross proceeds, you have a capital loss (up to $3,000 deductible per year against ordinary income, with unlimited carryforward). Make sure to calculate cost basis accurately and report on Form 8949.
❓ Q4: Does the wash sale rule apply to crypto in 2026?
Answer: No. As of January 30, 2026, the wash sale rule (IRS Section 1091) applies only to stocks, bonds, mutual funds, and ETFs — not cryptocurrency. This means you can sell Bitcoin at a loss and immediately rebuy it to harvest tax losses (this loophole may close in future legislation).
❓ Q5: What if I used multiple cost basis methods across different exchanges?
Answer: Technically, you should use the same method for the same asset (e.g., all Bitcoin transactions use FIFO). However, you can use different methods for different assets (e.g., FIFO for Bitcoin, LIFO for Ethereum). Just be consistent year-over-year to avoid IRS scrutiny.
⚖️ Legal Disclaimer
This article is provided for educational and informational purposes only and does not constitute legal, tax, or financial advice. Tax laws are complex and change frequently. Davit Cho and LegalMoneyTalk do not provide personalized tax advice. Always consult a qualified CPA, Enrolled Agent, or tax attorney before making tax-related decisions. Information is verified against IRS official guidance as of January 30, 2026, but the IRS may issue updates after publication.
π₯ Don't Miss These Essential Crypto Tax Guides
⚠️ Deadline Alert: February 17, 2026
Brokers must send Form 1099-DA by February 17. If you haven't received yours, contact your exchange immediately. Missing this form could cost you thousands in penalties.
π Read Full 1099-DA Guide
Questions? Email Davit Cho at davitchh@proton.me
Published: January 30, 2026 | Last Updated: January 30, 2026
