Crypto Tax Filing Becomes More Structured with Introduction of New Regulations

The US tax authority has introduced new regulations to report cryptocurrency gains and losses, affecting millions of taxpayers. The key change is the introduction of Form 1099-DA, which brokers must issue to both taxpayers and the IRS starting with the 2025 tax year.

Form 8949 is a granular worksheet where taxpayers itemize every taxable disposal of a capital asset. It captures the asset description, acquisition and sale dates, proceeds, cost basis, and any adjustments for each transaction. The totals from Form 8949 are then carried over to Schedule D, which summarizes everything before flowing into Form 1040.

However, taxpayers must be careful not to misclassify long-term positions as short-term, as this can result in thousands of dollars in lost taxes. The IRS's Automated Underreporter system cross-matches Form 8949 entries with 1099-DA data, and a mismatch can trigger an automated underreporter notice.