IRS improves detection of crypto tax mistakes for investors

Starting January 1, 2025, custodial brokers, think centralized exchanges like Coinbase and Kraken, are required to begin collecting data for a brand new tax form: the 1099-DA. The IRS will receive those forms during the 2026 filing season, giving the agency the same kind of data-matching firepower it has long wielded over your stock trades and bank interest. What’s actually changing The new reporting framework traces back to the Infrastructure Investment and Jobs Act of 2021. Final Treasury and IRS regulations were released in July 2024, laying out exactly how this would work. The short version: centralized exchanges and custodians must issue Form 1099-DA to report gross proceeds from digital asset transactions. The rollout is phased. For 2025 transactions, brokers only need to report gross proceeds. Cost basis reporting, the number that determines your actual gain or loss, won’t be mandatory until qualifying 2026 transactions. That’s a meaningful gap. It means that for the 2026 filing season, taxpayers will be responsible for calculating and reconciling their own cost basis. Why this matters for crypto investors The IRS has classified digital assets as property since Notice 2014-2...