Mid-February is when brokerage firms issue Forms 1099-B to their customers noting brokerage sales. New for the 2025 tax year is Form 1099-DA, “Digital Asset Proceeds from Broker Transactions” (aka cryptocurrency disposals). Many of our clients have begun to receive these forms. Based on our initial review, many individuals who have these forms will see the cost to prepare their returns increase–potentially, substantially.
But, you ask, weren’t those cryptocurrency transactions reportable last year? Absolutely. There are two differences for reporting in 2025 than in 2024. Last year (the 2024 tax year), we could lump all short-term cryptocurrency transactions on one spreadsheet, enter the totals in an asset entry worksheet, generate a pdf of that spreadsheet and attach it to the return, and then repeat for long-term cryptocurrency transactions. That was a fairly straightforward process for clients with good records.
This year is different. First, sales must be noted by exchange. If all transactions are “off-exchange” (or “on-chain”), then nothing has changed from 2024. However, if you have disposed of cryptocurrency at an exchange, each exchange’s transactions must be separated out. Second, transactions for an exchange must be split into those where basis was reported and where basis was not reported. Third, because detail must be included (we can still attach a pdf), in many cases we have to data-enter by transaction and cannot just use the software output (from software such as Bitcoin.tax or Koinly). Fourth, we’ve seen (in a small sample size) incorrect basis reporting from the exchanges, and this requires by-transaction corrections. The net result is that tax professionals will, in many cases, need to spend additional time (versus 2024 returns) to correctly prepare 2025 returns with cryptocurrency disposals. Additional time results in additional cost to clients. This may also result in additional clients needing to file extensions than last year.
This is just another reason why this Tax Season likely will be one to forget.
