The U.S. Internal Revenue Service (IRS) is streamlining crypto tax reporting for 2025 with a revised version of Form 1099-DA. This form, aimed at crypto brokers and investors, simplifies reporting requirements for brokered digital asset transactions.
Earlier Concerns Addressed
The initial draft of Form 1099-DA, released in April 2024, raised concerns within the crypto community. The form initially required details like wallet addresses, transaction IDs, and timestamps, raising privacy and data security concerns. Additionally, the definition of a “broker” subject to these regulations remained unclear, causing confusion for entities like kiosks, payment processors, and wallet providers.
Updated Form Offers Relief
The updated Form 1099-DA addresses these concerns by removing the requirement to report wallet numbers, transaction IDs, and timestamps. This eliminates privacy anxieties and simplifies reporting for brokers.
Furthermore, the form no longer requires identification of the specific broker type, such as “kiosk operator” or “digital asset payment processor.” This broader approach provides more flexibility for a dynamic industry.
Focus on Centralized Transactions
However, the updated form focuses on transactions facilitated by centralized brokers. The IRS clarified that separate regulations will address decentralized finance (DeFi) and non-custodial brokers later in 2024. These regulations will likely address reporting requirements for peer-to-peer transactions and activities within DeFi protocols.
Public Input Encouraged
While revisions address some initial concerns, the IRS invites public comments on the new draft form. This allows stakeholders to offer feedback and ensure the final version is practical and efficient.
Impact on Crypto Taxpayers
For crypto investors who use centralized exchanges and platforms, the revised Form 1099-DA simplifies reporting. Brokers will report relevant information like gross proceeds from sales and cost basis (purchase price) for crypto assets. This information will be crucial for taxpayers to accurately calculate taxable gains or losses on their crypto transactions.
Moving Forward with Crypto Taxation
The revised Form 1099-DA signifies the IRS’s ongoing efforts to establish a clear framework for crypto taxation. While complexities remain with DeFi and non-custodial transactions, the updated form demonstrates the government’s commitment to providing clear and workable tax rules for the evolving crypto landscape.