2025 marks a notable shift for cryptocurrency investors in the U.S., as they’ll encounter a change in how their tax obligations are reported. For the very first time, centralized trading platforms such as Coinbase and Gemini will be required to send transaction details directly to the Internal Revenue Service (IRS), based on CNN’s report. These brokers, which handle digital assets sold by customers, will supply this information not just to investors but also to tax authorities.
A fresh 1099-DA form will consolidate yearly cryptocurrency transactions. Just like 1099 forms for dividends or capital gains, its purpose is to ensure taxpayers don’t overlook their crypto income. Starting in early 2026, the IRS will have access to this data, allowing it to spot any inconsistencies between individual tax returns and recorded transactions.
As a researcher delving into the world of financial systems, I’ve noticed an interesting distinction: Accounts managed on centralized platforms must adhere to certain reporting requirements. On the flip side, transactions executed through decentralized platforms like Uniswap and Sushiswap operate under different rules. Regrettably, the initiation of reporting for wallet-to-wallet trades on these decentralized platforms will not commence until 2027.
Cost Basis Reporting Delayed to 2026: What It Means for You
As an analyst, I’m sharing that the rollout does not incorporate cost-basis reporting for the tax year 2025. Instead, it will be added to the system in 2026. Cost basis refers to the initial purchase price of cryptocurrencies used to determine taxable gains or losses. In the interim period, investors are required to manually calculate their gains and losses when reporting under this new system for the first time.
This year, investors in recently introduced bitcoin spot ETFs may encounter extra reporting responsibilities. Depending on the provider, they’ll receive either a 1099-B or a 1099-DA form. These documents detail taxable events such as profits or losses from shares sold by the ETF managers to meet operational costs.
As an analyst, I’d like to clarify that this reporting is not about introducing a new tax, but rather it’s a necessary measure aimed at enhancing compliance and increasing the accuracy of tax filings. The US Treasury has highlighted that the 1099-DA serves a dual purpose: firstly, it’s a gentle reminder to taxpayers about their responsibilities, and secondly, it streamlines the filing process and reduces associated costs.
For trades happening outside of centralized platforms, the rules are distinct. Decentralized exchanges serve as intermediaries for peer-to-peer transactions without storing user assets. This difference means that reporting of these trades to third parties is deferred until 2027. However, even when this happens, these platforms will only disclose the total earnings from each transaction, as they do not have information about the original prices at which users purchased.
Relief for Crypto Holders in 2025
1012–1(j)(3)(ii), and it’s designed to address difficulties arising from the recently implemented Section 6045 custodial broker regulations, which were finalized in 2025.
Great News: The Internal Revenue Service (IRS) has announced a temporary respite for cryptocurrency holders using Centralized Finance (CeFi) exchanges in 2025! This relief is provided under Section 1.1012-1(j)(3)(ii).
— Shehan (@TheCryptoCPA) December 31, 2024
Under the recently implemented rules, a First-In, First-Out (FIFO) approach must be used for cryptocurrency assets stored with Centralized Finance (CeFi) intermediaries when users don’t choose a specific method. Unfortunately, many CeFi brokers are not equipped to handle alternative methods such as Specific Identification (Spec ID). As a result, this situation might lead to undesirable tax consequences.
From January 1st, 2025 to December 31st, 2025, a temporary exemption is in effect for transactions taking place within CeFi exchanges. This means that crypto holders can opt to use their personal records or crypto tax software to track the specific units they sell. During this transitional phase, users will not be compelled to strictly adhere to the First In, First Out (FIFO) method.
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2025-01-16 19:09