Form 1099-DA: What It Is, Why It's Broken, and How it Triggers Audits

The 2025 tax year (filing in 2026) marks a massive shift for crypto investors. With the introduction of Form 1099-DA ("Digital Asset Proceeds From Broker Transactions"), the IRS now has direct visibility into your digital asset activity. This is the first filing season under the new rules. And it's already going sideways.

If you sold so much as a fraction of a token on a US centralized exchange in 2025, the IRS knows about it. What they don't know is what you actually owe. I describe Form 1099-DA as a speed camera that catches every car on the highway but reads half the license plates wrong.

I'm Chris Herbst, and at CountDeFi we've spent early 2026 fielding calls from clients who are confused, terrified, or both. The forms are late. The numbers are incomplete. The IRS already has its copy. And now it's on you to prove the government's own paperwork is wrong.

Who needs to pay attention: if you sold, traded, or exchanged any digital asset on a US centralized exchange during the 2025 tax year (January 1 through December 31, 2025), you will receive a Form 1099-DA. Your exchange was required to send it by February 17, 2026. The IRS already has theirs. Your return is due April 15, 2026. That timeline is already tight.

What Is Form 1099-DA and Why It Matters for Crypto Tax in 2026

The short answer: Form 1099-DA is a new IRS information return. It is not a form you fill out. It is a statement sent to you by your digital asset broker (Coinbase, Kraken, Robinhood, Gemini, PayPal, Cash App, etc.) via mail or  download. Your broker also sends a copy to the IRS. It reports gross proceeds from any sale, exchange, or disposal of digital assets during the 2025 tax year. In most cases, it does not accurately report what you originally paid. It does not calculate your tax. It does not replace Form 8949.

Form 1099-DA is the crypto equivalent of the 1099-B that stock traders have dealt with for decades. Form 1099-DA exists because of the 2021 infrastructure bill, where Congress decided crypto needed the same reporting framework as traditional securities.

Here's what  1099-DA is NOT:

• It is not a completed tax report or a form you file
• It does not calculate what you owe
• It does not replace Form 8949 (capital gains/losses) or Schedule D
• It does not capture crypto income like staking rewards or interest (that's Form 1099-MISC, taxed as ordinary income)

Form 1099-DA is the start of the conversation. Not the end of it.

Who Has to Issue a Form 1099-DA (and Who Doesn't)

Only brokers subject to the final regulations under §6045 are required to issue Form 1099-DA for the 2025 tax year. In practice, that means custodial platforms like Coinbase, Kraken, Gemini, Robinhood, PayPal, Venmo, Cash App, and similar digital asset brokers.

NOT covered by 1099-DA reporting:

• Decentralized exchanges (DEXs)
• DeFi protocols
• Non-custodial wallets (MetaMask, Ledger, etc.)
• Peer-to-peer transactions

Congress originally tried to include decentralized platforms. Both the House and Senate voted to repeal that provision using the Congressional Review Act, and President Trump signed the repeal into law in April 2025. Form 1099-DA covers part of your crypto life. You're still responsible for reporting the rest.

Haven't Received a 1099 Yet?

If you traded crypto on a centralized exchange in 2025 and your Form 1099-DA still hasn't shown up, you're not alone. Major platforms including Coinbase, Kraken, and Gemini have all reported Form 1099-DA delays, and some users have been told to expect their forms as late as mid-March.

The broker deadline for exchanges to issue Form 1099-DA was February 17, 2026, later than the standard January 31 for other 1099 forms, to account for crypto's complexity.

However, here's the wrinkle: under IRS Notice 2024-56, brokers making a "good-faith effort" to comply with the new requirement will not face penalties for late or incorrect Form 1099-DAs during this first year. This transitional penalty relief is what exchanges like Coinbase are referring to when they say they're "operating under an IRS-permitted extended timeline." The deadline is real. The consequences for missing it, for exchanges, are effectively waived during the rollout.

That's good for exchanges. It's a problem for you, because your April 15 filing deadline hasn't budged.

Where to find your Form 1099-DA:

• Online portal: Your exchange's "Tax Center" or "Documents" section. Most platforms post the digital copy here first.
• Email: Check spam and junk folders for a secure link or notifications about Form 1099-DA
• Mail: If you didn't opt into electronic delivery, the form should be postmarked to your address on file.

Remember, not receiving a Form 1099-DA does not exempt you from reporting. If you had taxable disposals during the 2025 tax year, you must report them on Form 8949 and Schedule D regardless of whether the form has arrived. Get the full lowdown in our updated US crypto tax guide, 'How is Crypto Taxed.'

Read next:

If your Form 1099-DA is late, your cost basis needs reconstructing, or you're dealing with activity across multiple exchanges and DeFi protocols, rushing to meet April 15 could cost you. An extension isn't a red flag. It's a strategy. I break down the reasons why in my next post: 'Why Filing a Crypto Tax Extension in 2026 Might Be the Smartest Move You Make'.

What Form 1099-DA Reports (and What It Leaves Out)

For the 2025 tax year, exchanges report only gross proceeds, what you sold your crypto for, on a per-transaction basis.

This changes for the 2026 tax year (filing in 2027). Brokers will then also report cost basis, but only for "covered" assets: crypto bought and sold on the same exchange after January 1, 2026. For everything acquired before that date or transferred between platforms, the basis gap persists.

Typically included on Form 1099-DA:

• Crypto sold for USD (or other fiat)
• Crypto-to-crypto trades

Typically NOT included on Form 1099-DA (or reported differently):

• Qualifying stablecoin sales under $10,000 (de minimis threshold; brokers using optional aggregate reporting may not itemize these)
• Specified NFT sales under $600 (de minimis threshold under optional reporting methods)
• Wrapping/unwrapping (e.g., ETH to WETH), lending, and staking transactions (reporting deferred under IRS Notice 2024-57 pending further guidance)
• Staking income and rewards (reported on Form 1099-MISC, not Form 1099-DA)
• On-chain DeFi activity

Just because it's not on Form 1099-DA doesn't mean it's not taxable. You must still report all taxable activity: capital gains on Form 8949 and Schedule D, ordinary income on Schedule 1.

The Zero Cost Basis Problem: Why Your Crypto Tax Bill Looks Wrong

At CountDeFi, this is the single biggest issue we're dealing with this filing season.

Form 1099-DA reports what you sold for. What it often reports as zero is what you originally paid.

Proceeds minus nothing equals 100% taxable gain.

Example: you bought SOL in 2021 for $3,000, held it in a hardware wallet, moved it to an exchange, and sold for $12,000. Your actual gain is $9,000. But the exchange never saw the purchase, so your Form 1099-DA shows $12,000 in proceeds and $0 in cost basis. The IRS sees $12,000 of profit out of thin air.

For the 2025 tax year, brokers are not required to report cost basis. Form 1099-DAs arriving now commonly show "$0," "Unknown," or partial basis. If you ever transferred crypto between platforms, the basis trail is broken.

The Cost Basis Trap: How People Overpay Thousands in Crypto Tax

People hand their Form 1099-DA to a preparer or import it into software. The software sees proceeds with no basis and taxes the full amount.

At CountDeFi, we've already caught clients on track to overpay by thousands.

What you need to know:

• Missing basis does NOT mean taxable gain
• You are allowed and expected to report your own cost basis on Form 8949
• The IRS confirmed this in Notice 2025-7, Section 4.02 (temporary relief for taxpayer lot identification with adequate records)
• You do NOT need the exchange to fix your Form 1099-DA
• You need your own records to be right

Blindly importing this form without correcting the cost basis probably means overpaying at tax time. 

The IRS Had Almost No Visibility Into Crypto. That Just Changed.

Form 1099-DA isn't just an administrative headache. It's doing exactly what it was designed to do.

For years, crypto operated in a tax reporting blind spot. IRS tax gap research shows that when income is not subject to third-party reporting, compliance drops to roughly 55%. Where substantial third-party reporting and withholding exist, compliance exceeds 90%. Until Form 1099-DA, there was no standardized third-party reporting regime for digital asset capital gains. A July 2024 TIGTA audit found that only 0.31% of IRS civil examinations reviewed during the audit period included digital asset issues, and noted that enforcement activity was limited and largely indirect.

Form 1099-DA changes that overnight. The IRS now has a direct data pipeline from every major US exchange. Every sale, every trade, every crypto-to-crypto swap on a centralized platform during the 2025 tax year is visible.

At CountDeFi, a significant portion of our new clients this year have never reported, or significantly underreported, their crypto activity. For the first time, the IRS has receipts.

How IRS Matching Turns Form 1099-DA Errors Into Crypto Tax Audits

The IRS receives every Form 1099-DA issued to you. Their automated systems scan your Form 8949 for matching proceeds. If the numbers don't align, it triggers a flag and potentially a CP2000 notice.

At CountDeFi, a client recently compared their transaction export against their Form 1099-DA. The totals didn't match, not because of any error, but because the form may exclude or aggregate certain transactions: qualifying stablecoins below the de minimis threshold, specified NFTs under $600, wrapping, lending, staking (deferred under Notice 2024-57), and all DeFi activity. All still taxable. Just not itemized on the form.

You end up in a situation where:

• The IRS has a number (from Form 1099-DA)
• Your crypto tax software has a different number (it includes more transactions)
• Both can be technically correct
• Any proceeds discrepancy is a potential trigger

Reconciliation must go both directions: match the exchange's reported proceeds AND include everything the form left out. Most crypto tax software doesn't do this automatically. At CountDeFi our data scientists practically live for this level of complexity. 

What Every Crypto Tax Filer Needs to Do Right Now

1. Do not treat your Form 1099-DA as a finished tax document. If you refer to it, or import it without correcting cost basis, you will overpay.
2. Gather your complete transaction history from every platform and wallet you've ever used. Cost basis follows the asset, not the platform.
3. Use crypto tax software or a specialist to import each Form 1099-DA, incorporate all wallet histories, and generate an accurate Form 8949.
4. Reconcile before you file. Common mismatch causes: excluded transaction types, rounding, and UTC time zone differences pushing December 31 trades into the next tax year.
5. Don't forget income. Staking rewards and interest go on Form 1099-MISC as ordinary income, not on Form 1099-DA.
6. If your Form 1099-DA is late, consider an extension. You have IRS authorization to use your own cost basis under Notice 2025-7, but you still need the form to confirm proceeds.
7. If you've never reported crypto, start now. The IRS has the data. Voluntary compliance beats a notice every time.

Frequently Asked Questions About Form 1099-DA

Do I need to wait for my Form 1099-DA before filing my crypto taxes? 

Ideally, yes. Your Form 8949 proceeds need to match what the exchange reported to the IRS. Filing without Form 1099-DA risks a mismatch that could trigger a notice.

My Form 1099-DA shows $0 cost basis. Is my entire crypto sale taxable? 

No. A $0 or "unknown" cost basis on your Form 1099-DA does not make your entire sale taxable. Report your own accurate cost basis on Form 8949. The IRS expects this (Notice 2025-7).

Do I need my exchange to correct a wrong cost basis on my Form 1099-DA? 

No. Report the correct basis yourself on Form 8949 using your own records. You do not need the exchange to fix anything.

My Form 1099-DA doesn't include DeFi, staking, or wrapping. Am I off the hook? 

No. Form 1099-DA only covers centralized exchanges. DeFi, staking, wrapping, lending, and on-chain activity are still taxable. Self-report on Form 8949 or as ordinary income.

My crypto tax software totals don't match my Form 1099-DA. Which is right? 

Possibly both. Form 1099-DA may exclude or aggregate certain transaction types: qualifying stablecoins below de minimis thresholds, specified NFTs under $600, and transactions deferred under Notice 2024-57 (wrapping, lending, staking). Your software likely includes them. Reconcile the difference on Form 8949.

I traded on three exchanges. How many Form 1099-DAs will I get? 

Three. Each exchange issues its own. None can see what the others reported. You bring it together on Form 8949.

I haven't reported crypto in prior years. Will Form 1099-DA expose that? 

Yes. The IRS can now see exchange-reported proceeds that don't match your past returns. Get compliant voluntarily before they reach out.

Does Form 1099-DA replace Form 8949?

No. Form 1099-DA is informational. Capital gains and losses are still reported on Form 8949 and Schedule D.

Where do I report staking rewards if they're not on Form 1099-DA?

Staking income, rewards, and interest are reported on Form 1099-MISC (if over $600/year) and taxed as ordinary income on your return.

Is Form 1099-DA just a 2025 tax year issue?

No. It's permanent, and this is year one. Cost basis reporting starts for the 2026 tax year (filing in 2027), but only for covered assets bought and held on the same exchange after January 1, 2026. Form 1099-DA is the new normal.

Will Coinbase send 1099-DA?

Yes. If you sold or disposed of digital assets on Coinbase during the 2025 tax year, you may receive Form 1099-DA in early 2026. Coinbase is required to issue Form 1099-DA to US customers starting with the 2025 tax year. You may also receive Form 1099-MISC if you earned more than $600 in crypto income such as staking rewards. You must report all taxable crypto activity even if no form is issued.

What does Coinbase 1099 include?

Form 1099-DA from Coinbase generally reports your name and TIN, the digital asset sold, date acquired if known, date sold, gross proceeds, cost basis if available, and short or long term classification if determinable. For the 2025 tax year, Coinbase is not required to report cost basis to the IRS. In many cases the form will show gross proceeds only. As a result, the gain shown may not reflect your actual taxable gain or loss.

Why does my Coinbase Form 1099-DA show incorrect gains?

For 2025 transactions, Coinbase reports gross proceeds on Form 1099-DA and may not report cost basis. If you transferred crypto into Coinbase before selling, acquired crypto before 2026, or moved assets between wallets or exchanges, Coinbase may not have your full acquisition history. This can result in cost basis listed as unknown, overstated gains, or incomplete holding period data. You are responsible for calculating and reporting the correct cost basis on your tax return.

What are covered vs non-covered assets on Coinbase Form 1099-DA?

Beginning with sales in 2026 filed in 2027, Coinbase must report both proceeds and cost basis for covered digital assets on Form 1099-DA. Covered assets generally include crypto acquired and held on Coinbase on or after January 1, 2026 and sold on Coinbase. Non-covered assets include crypto acquired before January 1, 2026 and crypto transferred into Coinbase from another exchange or wallet. For non-covered assets, Coinbase reports proceeds only and you must determine and report your own cost basis.

When will Coinbase issue Form 1099-DA?

For the 2025 tax year, Coinbase has stated it will provide Form 1099-DA to US customers no later than March 17, 2026 and you will receive an email notification when it is ready for download. The general IRS furnishing deadline is February 17, 2026, but Coinbase has indicated it will rely on extended timing for the first year of reporting. Even if your Coinbase Form 1099-DA is issued in March, you are still required to file your tax return or extension by April 15, 2026.

Can I edit my Coinbase Form 1099-DA?

Coinbase may allow you to add or update cost basis information for certain transactions within your account. However updates for 2025 may not be reported to the IRS and you remain responsible for reporting accurate gains and losses. Always confirm that your own records reflect any changes before filing.

Don't Let a Delayed Form 1099-DA Trigger an IRS Audit

This is the first year brokers must report 2025 digital asset sales on Form 1099-DA. Exchanges are late. Cost basis is missing. The burden of getting it right falls on you.

At CountDeFi, we specialize in exactly this. Our crypto tax services include:

• Crypto transaction reconstruction: Rebuilding histories across exchanges, wallets, and on-chain activity for accurate cost basis.
• Form 1099-DA reconciliation: Resolving data discrepancies before they become IRS problems.
• Form 8949 and Schedule D preparation: Accurate reporting that accounts for everything Form 1099-DA misses,

Form 1099-DA is the start of the conversation. Let us help you finish it correctly. Start by booking a free call with one CountDeFi's IRS crypto tax speciliasts.