IRS Unveils Form Your Broker May Send Next Year to Report Your Crypto Moves
The U.S. Internal Revenue Service (IRS) has previewed what crypto investors' future tax form might look like when it finishes its much-debated rule on how cryptocurrency transactions should be reported to the federal government.
The IRS offered a draft of the 1099-DA form that would be meant to figure out the taxable gains or losses when brokered digital assets change hands. The form reveals the agency will likely have an array of individual token codes that can be filled in, and it includes spaces for wallet addresses and where to find transactions on the relevant blockchain.
"Brokers must report proceeds from (and in some cases, basis for) digital asset dispositions to you and the IRS on Form 1099-DA," according to the instructions included with the form, which shows a 2025 date. "You may be required to recognize gain from these dispositions of digital assets."
This unveiling is preliminary and may still change depending on the final outcome of the tax rule proposed last year. While the establishment of U.S. tax practices for crypto is among the necessary steps toward ridding investors of uncertainty and confusion, cryptocurrency businesses are nervous about how the IRS will identify the digital asset brokers that would need to comply with the new system – potentially including wallet providers, decentralized platforms and payment processors.
This version of the form asks the filer to check a box that describes the type of broker they are: kiosk operator, digital asset payment processor, hosted wallet provider, unhosted wallet provider or "other."
"As expected, the look and feel are similar to the Form 1099-B for reporting sales of traditional financial products," said Jessalyn Dean, vice president of tax information reporting at Ledgible, in an analysis of the form that also noted the IRS has "packed a lot of lines and boxes into this form."
Dean pointed out references to so-called wash sales and that the form provides for transactions that are only recorded internally by crypto firms. She contended that at least one of the boxes on non-deductible losses would need more guidance on how it works.
Miles Fuller, the head of government solutions at TaxBit, welcomed the "long-awaited" draft in a posting on LinkedIn.
"The form also carries through the requirements in the current draft regulations that wallet addresses and transactions hashes will be provided where relevant," he wrote. "This was another point that received heavy feedback for a few different reasons. I am curious if this will change as the final regulations are released."
The IRS is inviting public comments about the draft form. It remains unclear when the tax agency will produce a final rule, though the 2025 form suggests a completion at some point this year.
Read More: New Form 1099-DA: What it Means for Digital Asset Brokers and Their Customers