Common Questions About Crypto Tax Reporting

Important Notice: This information is for educational purposes only and does not constitute tax, legal, or financial advice. Tax laws are complex, and everyone's situation is unique. The information provided here is based on current IRS regulations as of November 2025 and is subject to change.

This article provides general information about cryptocurrency tax reporting and should not be relied upon as tax advice. Please consult a qualified tax professional, certified public accountant (CPA), or tax attorney for advice specific to your personal circumstances and tax situation.

This content is designed to help you understand new reporting requirements, but you remain responsible for ensuring compliance with all applicable tax laws.

For official IRS guidance, please visit www.irs.gov/Form1099DA or consult with a tax professional.

This comprehensive FAQ covers the most common questions about W-9 forms, 1099-DA reporting, and cryptocurrency taxes. Questions are organized by topic for easy navigation.

Q1: Why is this happening now? Why didn't I get tax forms before?

A: Starting January 1, 2025, new federal regulations require cryptocurrency exchanges to report customer transactions to the IRS, similar to how stock brokers have operated for decades. This stems from the Infrastructure Investment and Jobs Act (2021) and final Treasury regulations issued in June 2024. Before 2025, crypto reporting was largely optional and inconsistent. Now it's mandatory and standardized.

Q2: Does this mean I'm paying new taxes on cryptocurrency?

A: No. The tax treatment of cryptocurrency hasn't changed. You have always been required to report crypto transactions and pay taxes on gains. What's new is that exchanges now send you (and the IRS) official documentation of your trades, making it easier to file accurately. This is a reporting change, not a tax change.

Q3: I've been trading crypto for years and never reported it. What should I do?

A: We cannot provide tax advice about this situation. However, with 1099-DA reporting now in place, the IRS will have detailed records of your 2025 (and future) transactions. If you have unreported past year crypto income, you should consult a tax professional or tax attorney about how to address prior years.

Q4: Can I avoid this by using decentralized exchanges (DEXs)?

A: Decentralized exchanges are not currently required to issue 1099-DAs (these regulations currently apply only to custodial brokers). However, you're still legally required to report all qualifying cryptocurrency transactions on your tax return, regardless of where they occur.

Additionally, if you transfer crypto between a centralized exchange and a DEX, the centralized exchange may report the transfer amount.

Q5: What exactly is a W-9 form?

A: Form W-9 (Request for Taxpayer Identification Number and Certification) is a standard IRS form that collects your basic tax information: name, address, and taxpayer identification number (usually your Social Security Number or EIN). It's used by financial institutions and other businesses that need to report payments to you and the IRS. We have provided an online form to conveniently and quickly complete this requirement.

Q6: Why do you need my Social Security Number?

A: Federal law requires us to collect taxpayer identification numbers before issuing 1099 forms. We use your SSN (or EIN) to:

Without it, we are required by law to withhold 24% of your proceeds as backup withholding.

Q7: Is it safe to provide my SSN online?

A: Yes, when you submit through our secure system. Your tax information is encrypted in transit and at rest, accessed only by authorized personnel, never shared except as required by law. We treat your SSN with the same or higher security as your account login credentials and financial data.

Q8: What happens if I don't submit a W-9?

A: Federal law (Internal Revenue Code Section 3406) requires us to:

For example, if you sell $1,000 of Bitcoin without a W-9 on file, we withhold $240 and send it to the IRS. You receive only $760. You can claim credit for the withheld amount when you file your tax return, but this creates unnecessary complication and delays access to your funds.

Q9: I'm not a U.S. citizen. Do I still need to complete a W-9?

A: No. If you're not a U.S. person for tax purposes, you will complete a different form:

Q10: I already gave you my SSN when I signed up. Why do I need to submit a W-9?

A: The 2025 regulations require an official, certified W-9 form on file. While you may have provided your SSN informally during signup, we now need the formal W-9 certification to comply with IRS requirements. It's a quick one-time submission (about 2 minutes) through your account settings.

Q11: What is Form 1099-DA?

A: Form 1099-DA (Digital Asset Proceeds From Broker Transactions) is a new IRS tax form specifically for reporting cryptocurrency and digital asset transactions. It is similar to Form 1099-B that stock investors receive. The form shows your cryptocurrency sales, exchanges, and dispositions for the year, helping you report them accurately on your tax return.

Q12: When will I receive my 1099-DA?

A: You'll receive your 1099-DA form(s) by February 17, 2026 for transactions that occurred during calendar year 2025. Exchanges are required to furnish forms to customers by this date. Your form(s) will be available via:

Q13: How many 1099-DA forms will I receive?

A: You will typically receive a separate 1099-DA for each type of cryptocurrency you traded. For example:

Each cryptocurrency is reported separately because they're treated as distinct assets for tax purposes. If you trade on multiple exchanges, you'll receive separate forms from each exchange.

You may also receive a composite form.

Q14: Why do I get multiple forms instead of one form for all my crypto?

A: The IRS requires separate reporting for each cryptocurrency type because they're distinct assets with separate:

It's the same reason stock brokers send separate reporting for Apple stock vs. Microsoft stock.

Q15: What information will be on my 1099-DA?

A: For 2025 (forms issued in 2026), your 1099-DA will show:

Starting in 2026 (for trades of crypto purchased in 2026+), cost basis will be required for "covered securities."

Q16: What if I traded 100 times? Will I get 100 forms?

A: No. You'll get one form per cryptocurrency type showing aggregate information. For example, if you made 100 Bitcoin trades, you'll receive ONE form for Bitcoin that aggregates all your Bitcoin activity for the year.

Q17: I only bought crypto, never sold. Will I get a 1099-DA?

A: No. Form 1099-DA only reports sales, exchanges, and dispositions. If you only purchased cryptocurrency and held it (no sales or exchanges), you won't receive a form. However, you should keep records of your purchases for future reference when you eventually sell.

Q18: What do I do with my 1099-DA when I receive it?

A: Use it to complete your tax return:

Your tax software will guide you through this process, or provide the form to your tax preparer.

Q19: What if I find an error on my 1099-DA?

A: Contact our customer support immediately. Specify:

We'll investigate and issue a corrected 1099-DA if appropriate. Don't file your taxes until the issue is resolved—incorrect forms can trigger IRS notices.

Q20: What's different about stablecoin reporting?

A: Stablecoins (like USDC, USDT) have special rules:

Critical: Even if your stablecoin trades are under $10,000 and you don't receive a form, you still must report them on your tax return. The $10,000 threshold affects our reporting requirement, not your reporting obligation.

Q21: If I trade $8,000 in stablecoins, do I need to report it?

A: Yes! You must report all cryptocurrency transactions on your tax return, regardless of dollar amount and regardless of whether you received a 1099-DA. The absence of a form doesn't eliminate your tax obligation. Keep your own records and report everything.

Q22: What if I trade stablecoins on multiple exchanges and total more than $10,000?

A: The $10,000 threshold applies per exchange, not across all platforms. Example:

You won't receive forms from either exchange because you stayed under $10,000 on each platform individually. However, you must still report all $13,000 on your tax return using your personal records.

Q23: Do stablecoins create taxable gains if I buy at $1 and sell at $1?

A: Typically no, but small fluctuations can occur. If a stablecoin maintains its $1.00 peg:

However, if the stablecoin fluctuates (depegging events), you could have small gains or losses:

Most properly-pegged stablecoins result in minimal or zero gains/losses.

Q24: I trade on three different exchanges. How does reporting work?

A: You'll receive separate 1099-DAs from each exchange for the cryptocurrencies you traded on that platform. Example:

You must collect forms from all exchanges and report all of them on your tax return. Create a checklist of exchanges to ensure you receive all expected forms.

Q25: What if one exchange doesn't send me a 1099-DA?

A: First, verify whether you should have received one:

If you should have received a form:

For your tax filing:

Q26: What cryptocurrency transactions are taxable?

A: Taxable events include:

Not taxable events:

Q27: How is crypto taxed?

A: Most cryptocurrency transactions result in capital gains or losses, taxed similar to stocks:

Short-term (held 1 year or less):

Long-term (held more than 1 year):

Some crypto income (mining, staking, airdrops) may be taxed as ordinary income when received, then later as capital gains when sold.

Q28: Can I deduct my crypto losses?

A: Yes. Capital losses from cryptocurrency can:

Example:

Q29: What if I lost money overall? Do I still need to report?

A: Yes. Even if you had a net loss for the year, you must report all transactions. Reporting losses is actually beneficial—you can use them to offset other gains and reduce your tax bill. If you don't report losses, you miss out on this tax benefit and may still face IRS questions about the transactions shown on your 1099-DAs.

Q30: Do I need to report crypto if I didn't cash out to dollars?

A: Yes. Exchanging crypto-for-crypto is a taxable event, even if you never converted to dollars. Example:

Simply holding various cryptocurrencies doesn't trigger tax, but exchanging them does.

Q31: What if I can't figure out my cost basis for old crypto?

A: This is a common problem for long-time crypto holders. Options:

Q32: What if I transferred crypto between exchanges?

A: Transfers between exchanges (or wallets) aren't taxable events—they're just moving property you already own. However:

Q33: What if I gifted crypto to family or donated to charity?

A: Gifts to individuals:

Charitable donations:

Consult a tax professional for complex gift or donation situations.

Q34: What records should I keep?

A: Maintain records for each cryptocurrency transaction:

Also keep:

Q35: How long should I keep tax records?

A: The IRS recommends:

Many tax professionals recommend keeping crypto records indefinitely since:

Q36: Do I need a tax professional for crypto taxes?

A: It depends on your situation. Only you can determine your personal comfort level with taxes:

Consider a tax professional if:

You might be okay with tax software if:

Many people benefit from at least one consultation with a crypto-savvy tax professional to set up proper systems, even if they file themselves in future years.

Q37: I lost access to my crypto in a hack or exchange collapse. Is that deductible?

A: This is a complex, evolving area of tax law. Previously, theft losses were deductible under certain conditions. Current law (post-2017 tax reform) limits theft loss deductions except for federally-declared disaster areas.

Consider getting professional advice from a tax attorney or CPA familiar with crypto loss situations.

Q38: What if I mined or staked cryptocurrency?

A: Mining: Generally taxed as ordinary income when received, at fair market value:

Staking: Similar treatment—taxable as income when received, later sale creates capital gain/loss.

Note: 1099-DA reports sales/exchanges, not mining/staking rewards. You may receive Form 1099-MISC for some staking rewards, but many require self-reporting. You may wish to consult a tax professional for advice on your specific situation.

Q39: What tax forms do I need to file for crypto?

A: Most crypto traders will use:

You may also need:

Virtual currency question: Form 1040 asks: "At any time during 2025, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, gift, or otherwise dispose of a digital asset?" You must answer this question.

Q40: Do I report each individual transaction?

A: Technically yes. Follow your tax professional's or tax software's guidance on the level of detail required.

Q41: What if my return doesn't match my 1099-DA?

A: For tax reporting year 2025, your 1099-DA is required to show your gross proceeds. From 2026 and onwards both gross proceeds and cost basis (if known) will be provided. If assets were transferred onto our platform, we may not know your cost basis. Your records are needed to complete your return accurately.

Q42: What if I get an IRS notice about my crypto?

A: What to do:

Many notices can be resolved with proper documentation showing your reporting was correct.

Q43: What are the penalties for not reporting crypto?

A: IRS penalties can include:

Criminal penalties: In extreme cases of tax evasion, criminal prosecution is possible (rare, but happens).

Best strategy: Report everything accurately and timely. If you made past mistakes, consult a tax professional about voluntary correction before the IRS catches it.

Q44: Where can I get help understanding my specific situation?

A: Resources:

Q45: What's the single most important thing I should do?

A: Report everything accurately and keep excellent records.

With 1099-DA reporting now in place, the IRS has visibility into your transactions. The best strategy is complete transparency:

Most crypto tax problems come from incomplete reporting or poor record-keeping, not from complex tax calculations. Start with good habits, and tax season will be much easier.

Official IRS Resources:

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