As the Internal Revenue Service (IRS) prepares to introduce Form 1099-DA in 2026, U.S. taxpayers with digital asset holdings need to act now. This new form will require brokers to report covered and non-covered transactions, making accurate capital gains tracking essential for your tax return.
Understanding Form 1099-DA Reporting
Beginning with transactions on or after 01/01/2026, digital asset brokers must issue Form 1099-DA to report sales and exchanges to both the IRS and account holders. This change aligns crypto reporting more closely with traditional securities like stocks.
Covered and Non-Covered Digital Assets Explained
Covered digital assets are those where the broker reports cost basis information to the IRS, similar to covered securities. Non-covered assets require taxpayers to provide their own basis calculations on Schedule D of their tax return. Proper classification helps avoid discrepancies during IRS audits.
Practical Steps for Accurate Capital Gains Tracking
- Organize all transaction records from exchanges and wallets dating back to your first crypto purchase.
- Select tax software that supports 1099-DA imports and distinguishes between covered and non-covered assets.
- Analyze cost basis methods such as FIFO or specific identification to calculate gains and losses correctly.
- Reconcile broker reports with your personal records to catch any errors before filing.
- Test your tax calculator with sample data to ensure it handles the new reporting requirements accurately.
Preparing Your Tax Calculator for Compliance
Update your chosen tax software to the latest version that accommodates Form 1099-DA. Focus on features that import broker data automatically and flag non-covered transactions for manual review. This preparation reduces the risk of underreporting capital gains and supports timely tax return submission.
By following these steps, you can navigate the 2026 changes with confidence and maintain full compliance with U.S. tax regulations.