The 2025 US tax season is underway with new IRS rules requiring cryptocurrency brokers to report gross proceeds from certain digital asset sales—a significant shift designed to improve tax compliance and transparency.
Crypto investors face reporting hurdles
Despite these changes, many taxpayers still encounter challenges. A survey conducted in August by Awaken Tax, which polled 1,000 US cryptocurrency investors, found that 21% of those who had filed or intended to file a tax extension blamed missing information from exchanges or crypto platforms.
Another 20% of respondents indicated their 1099-DA forms—the specific tax document for digital asset transactions—were incomplete or they were uncertain about the accuracy of the information provided.
This season marks the inaugural implementation of the IRS’s new reporting rules, with the extension deadline set for October 15. While brokers must report proceeds for 2025, they are not required to include cost basis information, forcing investors to independently calculate their gains and losses.
Experts highlight that the lack of cost basis reporting complicates tax calculation, especially for active traders with numerous transactions across several platforms. Chris Herbst, managing director at CountDeFi tax reporting, explained that active traders could see inflated gross proceeds on their forms not offset by acquisition costs, making their real gains difficult to determine without detailed record keeping.
For an active trader, gross proceeds reported can be several times higher than the actual gain, since every sale is listed without accounting for the original purchase price.
Investors must reconcile forms received from multiple exchanges, wallets, and years of activity. Missing or inconsistent documentation further increases the complexity, particularly as some platforms utilize different reporting formats and may omit key data.
Tax professionals spot frequent inconsistencies
Tax advisors are reporting numerous discrepancies between 1099-DAs and their clients’ own trade logs. Sharon Yip, founder of Crypto Tax Advisors, observed that some forms excluded a portion of clients’ 2025 trades and noted varying reporting practices regarding cost basis, even though basis reporting is not mandatory this year.
It is very confusing for taxpayers to reconcile the 1099-DAs they receive with the crypto tax reports they must submit, given inconsistent and incomplete information across different exchanges and forms.
She cited a case where a client’s 1099-DA showed less than $100,000 in stablecoin proceeds despite the client conducting over $300,000 in stablecoin trades during 2025.
Exchange reporting timelines have also contributed to delays. Andrew Duca, founder of Awaken Tax, pointed out that some platforms, such as Kraken, issued 1099-DA forms only two weeks before the April 15 tax deadline, and some forms lacked transaction details altogether.
The IRS maintains that taxpayers are responsible for fully reporting digital asset income, regardless of whether they receive a 1099-DA. This means taxpayers need to retain detailed records of trades, fees, deposits, withdrawals, and all wallet activity for accurate filing.
Tools and regulatory adjustments on the horizon
Many taxpayers find reconciliation complicated when assets shift between platforms, as it becomes difficult for receiving exchanges to verify the asset’s cost basis. Transactions involving purchases, private wallets, and subsequent sales may span several exchanges, leaving gaps in documentation that can affect tax liability calculations years later.
Andrew Gordon, executive director of Digital Asset Tax Action, says most current crypto tax software does not allow for direct import and reconciliation of 1099-DA data. Where import is possible, it often requires manual input because many brokers provided non-machine-readable versions for 2025. He suggests brokers should accompany each form with a compatible digital file and maintain complete transaction histories, including acquisition details, fees, and transfers.
Gordon points out that while the IRS now has better visibility over digital asset sales with the new rules, taxpayers should not rely solely on the figures in their 1099-DAs when filing. Tax professionals recommend comparing 1099-DAs against complete personal records to ensure accuracy.
In a market where a single Fed decision or a sudden altcoin listing can alter conditions within seconds, investors who switch between various apps for portfolio management, news, and trading data may be at a disadvantage. Some traders are turning to privacy-first solutions like CryptoAppsy, which offer real-time charts, targeted news, portfolio tracking, and macroeconomic updates on one platform, all without requiring account registration.
Looking ahead, brokers will need to begin reporting cost basis for covered digital assets starting in 2026. This measure is expected to help taxpayers calculate their gains and losses more effectively, although assets transferred from other platforms may still remain outside mandatory reporting requirements.
Despite increased oversight, taxpayers are advised to maintain thorough records, as accurate reporting ultimately depends on their personal documentation, not just forms issued by exchanges or brokers.
