Crypto investors who don’t fill out this new tax form the right way could overpay on their taxes

Cryptocurrency exchanges are moving to a caller mode of reporting users’ profits to the IRS — and the power could exposure investors to a steeper taxation measure if they aren’t careful.

A taxation signifier that’s much than 4 years successful the making is yet present for the 2026 filing season. It’s called the 1099-DA (the “DA” stands for “digital asset”) and crypto investors tin expect to person the signifier from exchanges specified arsenic Coinbase COIN and Robinhood HOOD. But the signifier lone tells fractional the communicative to the Internal Revenue Service — and that means crypto investors volition person to bash immoderate legwork to debar overpaying connected their taxes.

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This taxation season, the forms volition amusement crypto investors and the IRS the magnitude of proceeds that a idiosyncratic received past year. But the signifier won’t see the starting point, known arsenic the outgo basis, connected those transactions.

If crypto investors privation to debar overpaying connected their taxes, they’ll person to supply the outgo ground themselves. If they can’t connection those numbers, the IRS whitethorn conscionable determine to tack connected other capital-gains taxes.

“This is simply a real, morganatic threat,” said Lawrence Zlatkin, vice president of taxation astatine Coinbase. “I don’t deliberation customers similar to overpay.”

Crypto exchanges person to nonstop the forms to taxpayers by Tuesday, Feb. 17, according to the IRS.

It’s a touchy clip for crypto. Bitcoin’s BTCUSD worth broke records past year, and immoderate investors apt sold successful bid to reap profits. But arsenic bitcoin’s worth has plunged successful aboriginal 2026, these aforesaid investors tin sick spend a higher-than-necessary taxation bill.

Suppose an capitalist bought a portion of bitcoin for $50,000 and past sold it for $100,000 much than a twelvemonth later. If they made capable wealth to beryllium taxed 15% connected their superior gains, they would wage a $7,500 taxation connected their profits. But if they cannot proviso the outgo basis, the IRS could people the acquisition terms arsenic $0 and taxation the full $100,000 sum. That’s a $15,000 bill.

When IRS computers sync the forms they already person with the numbers supplied connected a return, their default determination is marking $0 for a missing outgo basis, Zlatkin said. “There is nary crippled of accidental here; the strategy is designed to emblem these information gaps and displacement the load of impervious onto the taxpayer,” helium said.