New Crypto Tax Form Makes Advisers Into Students and Teachers

For tax professionals, the month of April was filled with heavy workloads, strict deadlines, and pressing client requests.

This year’s tax season added another layer of complexity to an already demanding process, as it marked the most significant shift in crypto tax reporting history: the introduction of Form 1099-DA, an IRS tax form used by brokers to report proceeds from digital asset transactions.

Despite investors having more than a year to prepare, a new report from CoinTracker and Coinbase suggests a clear disconnect in crypto tax readiness—61% of crypto investors surveyed were unaware of the new 2025 crypto tax rules.

This lack of knowledge, combined with growing interest in digital assets over the past few years, created new challenges for tax professionals. They were forced to learn quickly to understand the new intricacies of crypto reporting to better support investors, ensure compliance with IRS expectations, avoid reputational risk, and ultimately tame the beast of crypto taxation.

But the inherent nature of digital assets doesn’t make that easy.

Understanding the Requirements

Digital assets exist in a fragmented environment, increasing the margin of error in tax reporting. Each wallet, exchange, and custodial platform represents a new “head” of the crypto hydra, a multi-faceted compliance challenge that can overwhelm anyone unprepared.

Asset trades, staking rewards, and payments made with assets can all trigger taxable events, producing large volumes of disconnected data that complicate tax preparation and review. Adding to this, Form 1099-DA—required for digital asset transactions occurring on or after Jan. 1, 2025—is largely incomplete.

Brokers were only required to report proceeds for the 2025 tax year. This left investors and tax professionals to manually calculate cost basis and report gains and losses based on that. This differs from what tax professionals may be accustomed to, such as Form 1099-B—the IRS tax form used to report proceeds and cost basis from stocks, bonds, commodities, or regulated futures.

Bottom line? Form 1099-DA is much less streamlined because of its early deployment and isn’t a holy grail for tax reporting.

Addressing the Complexity

Stakes are high for the tax sector. The CoinTracker and Coinbase report revealed that fewer than half of crypto investors understand what actually triggers a crypto tax event, and only a third know how to adjust cost basis, leading to increased audit exposure and time-intensive back-and-forth during filing season.

Beyond this, tax professionals may be at risk of regulatory scrutiny and reputational damage because of misreported or incorrect tax filings, impacting clients, the accountant, and the firm’s broader ability to serve future clients.

To avoid this issue, tax professionals must evaluate existing procedures for reconciling crypto taxes. This could mean implementing more standardized processes and educating clients on key information, such as what marks a taxable event.

With most filings likely signed, sealed, and delivered at this point, tax professionals must understand that there is still an opportunity to reconcile any missing or inconsistent crypto-related information.

The rule of thumb is to conduct due diligence and cross-check information against activities in exchanges, wallets, and other digital asset sources. If mismatches or errors are uncovered, tax professionals can amend the return and share corrected schedules and information.

Timing will be important. Tax professionals should complete their thorough review before any IRS notices are issued.

What Else?

Tax professionals also can look to automate what can be an error-prone and time-consuming process by using tax software tools to aggregate fragmented crypto data, track cost basis across wallets and platforms, and consistently identify taxable events.

Some tools even enable tax professionals to scan the entire blockchain for individual user activity, ensuring the smallest transaction is captured in a comprehensive tax return. This is a win-win, as it saves hours of manual labor.

Beyond reporting requirements, accurate crypto tracking can optimize investors’ tax processes to enable them to better understand the tax impact of their activity in advance, identify valuable tax-loss harvesting opportunities for 2026 taxes, and make more informed asset decisions year-round.

Revisiting Strategies

As crypto matures, it’s only natural to see a wave of increased adoption, further spotlighting the need for the right education, tools, and processes to manage crypto tax reporting and minimize headaches.

As reporting expectations evolve, individuals and businesses must stay in the know about real-time regulatory changes to reduce the risk of misreporting.

To tackle this, it’s advised to adopt a multi-pronged approach: Use technology to ensure timely alerts on key crypto tax rules, implement routine monitoring to track IRS and Treasury updates, and leverage the guidance and expertise of tax professionals.

Taking a proactive approach to understanding Form 1099-DA and managing crypto tax complexity can make all the difference in future tax seasons.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Shehan Chandrasekera is a CPA and head of tax strategy at CoinTracker, a crypto tax compliance and accounting technology firm.

Write for Us: Author Guidelines