The IRS has introduced a new information return called Form 1099 DA, which is designed to report digital asset transactions. This form creates one of the biggest changes in cryptocurrency and NFT tax reporting. Beginning in the 2025 tax year, brokers and platforms must track these transactions and send Form 1099 DA to customers in early 2026. Because the rules are new and detailed, many businesses are preparing now.
Key Takeaway:
The IRS requires brokers to use Form 1099 DA for digital asset transactions starting in 2025. They must send forms to customers and file with the IRS in 2026. WageFiling will support this form once the IRS releases complete electronic filing instructions.
Since digital asset activity can involve complex and frequent transactions, brokers benefit from understanding the reporting rules before the deadlines arrive.
What Is Form 1099 DA?
Form 1099 DA reports taxable digital asset activity. It works much like Form 1099 B for stocks, but it is tailored to the unique details of blockchain based assets.
Digital assets that may be reported on this form include:
- Cryptocurrency such as Bitcoin and Ethereum
- Stablecoins
- NFTs
- Wrapped tokens
- Tokenized real world assets
- Digital derivatives
You can review the IRS draft instructions here.
Why Did the IRS Create the 1099 DA Form?
For many years, taxpayers had to self report digital asset activity. As a result, many returns contained missing or incorrect information. With Form 1099 DA, the IRS wants to:
- Increase accuracy
- Reduce reporting mistakes
- Provide consistent documentation
- Ensure brokers supply clear cost basis and proceeds
- Help taxpayers file more complete returns
Because digital assets continue to grow in popularity, the IRS created this form to improve transparency and compliance.
Who Must File Form 1099 DA?
The IRS uses a broad definition of a digital asset broker. As a result, many types of businesses may be required to file.
Businesses likely required to file include:
- Crypto exchanges
- NFT marketplaces
- Digital asset trading platforms
- Custodial wallet providers
- Payment processors that handle digital assets
- DeFi platforms that support trades
- Marketplaces that enable tokenized asset sales
Hosted vs. Unhosted Wallet Providers
The IRS makes a clear distinction:
- Hosted (custodial) wallets hold customer assets and often meet the definition of a broker because they support trades.
- Unhosted (noncustodial) wallets usually do not qualify as brokers unless they also support transaction execution.
DeFi Platforms
Many decentralized platforms may fall under the broker definition if they:
- Support swaps
- Help users exchange tokens
- Provide automated trade execution
- Facilitate digital asset sales
Although IRS guidance continues to evolve, platforms that regularly enable transactions may have filing obligations.
What Transactions Must Be Reported?
Brokers must report taxable digital asset events. Since many blockchain activities can trigger gains or losses, accurate tracking is important.
Reportable transactions include:
- Selling cryptocurrency for cash
- Trading one digital asset for another
- Selling or exchanging NFTs
- Redeeming wrapped tokens
- Using digital assets to pay for goods or services
- Broker supported transfers in or out of customer wallets
- Liquidating digital asset holdings
Transactions that may become reportable later include:
- Staking rewards
- Liquidity pool withdrawals
- Airdrops
- Hard fork related assets
- Yield earned from decentralized platforms
Non reportable transactions include:
- Moving assets between personal wallets
- Transferring assets between exchanges when ownership does not change
Although these do not trigger tax events, brokers may still need to document them for tracking.
What Information Must Brokers Report?
Form 1099 DA requires detailed information so the IRS can clearly identify each transaction. Brokers must report:
- Customer identifying details
- Description of the digital asset
- Quantity sold or transferred
- Dates of acquisition and sale
- Proceeds
- Cost basis
- Blockchain fees and adjustments
- Wallet address or associated identifier
- Transaction ID
Because digital asset activity is recorded on blockchains, brokers must keep accurate and complete records.
The IRS Reporting Timeline for 2025 and 2026
To stay compliant, brokers need to follow the schedule the IRS outlined:
Starting January 1, 2025
Brokers must begin collecting digital asset transaction data.
Early 2026
Brokers must send Form 1099 DA statements to customers so they can prepare their 2025 tax returns.
March 2026
Brokers must file Form 1099 DA electronically with the IRS.
Corrections
If an error is found, brokers need to submit corrected forms once the issue is identified.
Because digital asset transactions are often frequent and complex, brokers should prepare systems well in advance.
Recordkeeping Expectations for Brokers
The IRS expects brokers to maintain clear and complete transaction records. These may include:
- Customer identity information
- Dates of asset purchases
- Cost basis
- Blockchain transaction IDs
- Wallet addresses
- Fees charged at the time of the transaction
- Smart contract details that affect asset value
Good recordkeeping helps brokers avoid errors and provide accurate data to both customers and the IRS.
How WageFiling Will Support Form 1099 DA
WageFiling is preparing to support digital asset reporting as soon as the IRS finalizes the technical filing rules. To help brokers stay ready, WageFiling offers:
1. Future electronic filing support
Once the IRS publishes technical instructions, WageFiling will add Form 1099 DA to its filing system.
2. Print and mail services
WageFiling will prepare and mail customer copies of the form once the IRS releases the final layout.
3. System updates that support modern IRS technology
WageFiling continues to upgrade its platform, including support for IRIS. You can review these improvements here.
4. Tools for first time filers
Since many digital asset businesses are new to 1099 reporting, WageFiling provides an easy filing experience and helpful guidance.
Frequently Asked Questions
1. When does the 1099 DA requirement begin?
The requirement begins with transactions completed on or after January 1, 2025. Customer copies and IRS filings are due in 2026.
2. Who must file Form 1099 DA?
Any platform considered a broker under IRS rules must file. This may include exchanges, NFT marketplaces, trading platforms, custodial wallet providers, and certain DeFi services.
3. Will WageFiling support this new form?
Yes. WageFiling will support Form 1099 DA once the IRS finalizes electronic filing specifications.
